Credit Suisse replaces CEO Dougan with Prudential's Thiam
Mar 10, 2015 09:23 AM EDT
Mar 10, 2015 09:23 AM EDT
Credit Suisse (CSGN.VX) is bringing in Tidjane Thiam, the head of British insurer Prudential (PRU.L), as its new chief executive to help drive the Swiss bank's push into wealth management in emerging markets.
Credit Suisse Chairman Urs Rohner said long-standing boss Brady Dougan was stepping down as chief executive at the end of June and would be replaced by Thiam, who has been Prudential chief since 2009 and seen its share price rise more than 200 percent in the past 5 years.
A former government minister in Ivory Coast and a partner at consulting firm McKinsey & Co, Thiam become the first black CEO of a FTSE 100 company when he moved to the top job at Prudential from insurer Aviva (AV.L), but has not run a bank.
Dougan has faced calls to quit since last year when Credit Suisse reached a $2.5 billion settlement with U.S. authorities for helping Americans evade taxes via secret bank accounts. The American is leaving after 25 years at Credit Suisse, eight of those as CEO.
Rohner said Thiam's international experience, particularly in wealth and asset management and developing new markets, laid the foundation for his appointment, which was reported overnight by various news outlets including Reuters.
"With Tidjane Thiam, a strong and distinguished leader with an impressive track record in the global financial services industry will take the helm of our bank," Rohner said.
Shares in the Zurich-based Swiss bank surged as much as 9 percent on news the management change. At 0541 ET, the shares were trading 7.5 percent higher at 24.94 Swiss francs.
Thiam's appointment comes as Credit Suisse's efforts to balance its business more equally between a more dominant investment bank and its wealth management division have stalled.
A Zurich-based brokerage salesman said the restructuring drive may now benefit from "a fresh pair of eyes".
"In addition, let's not forget that Thiam has direct experience in the Asia life and savings market, where Credit Suisse will seek to have greater aspirations via its Asian footprint within wealth management," the salesman wrote.
One UK-based fund manager said Thiam's appointment signaled a shift in the bank's priorities.
"Thiam's background in insurance and asset management suggests Credit Suisse's focus is moving increasingly away from investment banking," said the manager, who was reviewing his position after selling the bank's shares on concerns about capital requirements. "I'd like to see his plans first though."
Dougan said in a statement that he had "tremendous respect" for his replacement. "Now is the right time for the organization and for me to transition out of the CEO role," he said.
FRESH PAIR OF EYES
Despite failing to overcome a shareholder rebellion when attempting to take over Asia-focused insurer AIA (1299.HK) in 2010, French-speaking Thiam has brought value to Prudential's investors by focusing on Asia as a key driver of profit.
"Tidjane will have a broader view," Sally Yim, vice president at Moody's Investors Service, said before Credit Suisse made the announcement.
"Credit Suisse has had different issues throughout the years and someone with a diverse background could look at its strategy with a fresh pair of eyes."
Prudential, Britain's largest insurer by market value, confirmed Thiam's departure as it reported a 14 percent rise in operating profit in 2014.
The firm said a successor has been identified and would be announced after the regulatory approval process. Thiam is expected to remain in place until after the company reports first quarter figures in May.
Prudential (2378.HK) shares were suspended from trading in Hong Kong ahead of the announcement. The stock has risen 200 percent in London under Thiam's watch, outperforming the 36 percent gain in the FTSE index .FTSE.
"Credit Suisse needs a safe pair of hands to re-tool the business in an investor friendly way," a Hong Kong-based investment banker who worked closely with Thiam said before the announcement. "That means they will re-focus more on Asia."
He said private banking and asset management could be areas the bank would want to explore further in Asia.
Dougan is one of only three global bank CEOs still in the job following the financial crisis, alongside JP Morgan's (JPM.N) Jamie Dimon and Lloyd Blankfein at Goldman Sachs (GS.N).
The bank's board backed him over the deal with U.S. regulators, under which Credit Suisse pleaded guilty to criminal charges but kept its New York licence and its legally protected client data, but he was criticized by some politicians and media in Switzerland.
The Illinois native, who became CEO in 2007, was also criticized for sticking with aninvestment banking strategy at a time when that business was falling out of favor.
Cross-town Zurich rival UBS (UBSG.VX) made a high-profile withdrawal from investment banking, regarded by many in Switzerland as too risky following the financial crisis.
Recent troubles aside, Dougan has generally been a well-regarded outsider in the Swiss banking community.
He won plaudits from investors for steering Switzerland's second-largest bank through the post-Lehman Brothers turmoil, cutting riskier trading activities and avoiding getting entangled in U.S. subprime mortgages to the same degree as UBS, which took a state bailout in 2008.
One of the best-paid bankers in the world with an annual salary topping 90 million Swiss francs ($91 million) five years ago, he recently saw a pay cut as part of cost-cutting measures taken by the bank to tackle the surge in the Swiss franc.
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