New president Horta-Osorio well trained for Credit Suisse testing
Antonio Horta-Osorio will need to draw deeply on the lessons he learned during the turnaround of UK bank Lloyds (LLOY.L) when he joins Credit Suisse (CSGN.S) as new chairman on Friday.
As one of the longest-serving bank CEOs in Europe, he received applause for bringing Lloyds back from the brink in 2011, when in an interview this month he said he was “on the point of dying “after having to be bailed out during the financial crisis.
At Credit Suisse, another of the bank’s toughest jobs awaits “AHO”, as the 57-year-old was known to Lloyds, facing the damage from both the implosion of US investment firm Archegos and by the ramifications of the insolvency of the UK supply chain finance company. Greensill.
Together they have caused multibillion dollar losses, layoffs and bonus cuts at Credit Suisse, just as other banks are making windfall profits from trading and transactions. Read more
The fallout continued just hours before the start of the annual shareholders’ meeting, when the bank said Andreas Gottschling, head of the board’s risk committee, would not be re-elected. Read more
As Switzerland’s second-largest bank investigates what went wrong, its chief executive Thomas Gottstein has signaled further scrutiny of the bank once Horta-Osorio arrives.
“At Lloyds he was quite efficient in the reorganization. It sold non-core and toxic assets relatively successfully, reduced core costs and returned the bank to profitability and full private ownership, ”said Guy de Blonay, fund manager at Jupiter.
The Portuguese banker’s tenure at Lloyds spans the same decade as the outgoing chairman of Credit Suisse, but Urs Rohner’s time was marked by upheaval and doubts about the long-term direction of the Swiss bank. .
Trained as a lawyer and CEO of German TV and radio station ProSieben (PSMGn.DE) before joining Credit Suisse as legal counsel in 2004, Rohner has come under heavy criticism as he suffered a series of losses and scandals over the past five years.
While Lloyds shares fell about 25% under Horta-Osorio, Credit Suisse shares lost almost three-quarters of its value under Rohner.
With the appointment of Tidjane Thiam as CEO in 2015, Rohner aimed to reduce risks for the bank and make wealth management his goal, said two sources familiar with the matter.
Yet despite the turnaround initiated by Thiam, who left last year after a clash with Rohner over a spy scandal, Credit Suisse remains exposed to risky transactions and relationships.
It has lost more than $ 5 billion related to senior brokerage client Archegos and faces further fallout of more than $ 10 billion in funds related to Greensill. Read more
Including the Archegos charge, write-downs and penalties paid by Credit Suisse since the end of 2015 amount to more than $ 15 billion, as it faces at least three enforcement proceedings by the financial markets supervisor Swiss FINMA.
Rohner has largely avoided the spotlight following the bank’s latest round of problems. But he and Horta-Osorio have been in contact in recent months, a source familiar with the matter said, to ensure a smooth transfer.
Credit Suisse declined to comment.
Horta-Osorio focused on expanding the relatively calm retail banking, insurance and wealth management business in Lloyds and in his call for final results on Wednesday, said the return to private ownership in 2017 was the culmination of his tenure.
“More important than that was the journey along the way … achieving the goal of helping the UK’s real economy to the extent possible,” he said at a call for media.
However, Horta-Osorio has not had an easy ride, facing scrutiny over his high salary compared to other UK bank bosses, his handling of a landmark fraud case and a bankruptcy scandal. Industry-wide payment insurance mis-sell that ultimately cost Lloyds £ 22 billion and took years to resolve.
And he spoke publicly about battling stress and insomnia as Lloyds was troubled by the Eurozone crisis of 2011.
“It got me into a period of exhaustion because you know where I must have taken a few weeks and then I came back. Those were really bad days,” Horta-Osorio said this week.
Analysts say his experience with misconduct issues should come in handy as he enters Credit Suisse at a time of risk management crisis.
“He’s known for his attention to detail and his drive, and we assume risk management will be his top priority,” said Maria Rivas, senior vice president of global financial institutions at DBRS Morningstar.
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