A year into the job, Credit Suisse CEO's superstar status loses shine

Thu Jun 30, 2016 7:20am EDT
 
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By Joshua Franklin and Oliver Hirt

ZURICH (Reuters) - Credit Suisse Chief Executive Tidjane Thiam likes to joke he has a predilection for being under pressure. A year into the job he may have got more than he bargained for.

Shares in Switzerland's second-biggest bank touched record lows in June, and have plunged more than 50 percent since the former head of British insurer Prudential took up his new post on July 1 last year.

Turbulent financial markets, exacerbated by Britain's vote last week to leave the European Union, have complicated what was always likely to be a difficult restructure of a global investment bank.

But muddled communication of a new strategy, 2018 pre-tax income targets that many felt were optimistic to begin with and concerns the bank needs more cash have undermined his credibility, experts said.

"At the beginning everyone thought he could walk on water. Nowadays everyone thinks he struggles to swim," said Zuercher Kantonalbank analyst Andreas Brun, who has a "market weight" rating on the stock.

An outsider to both the bank and banking, hopes were high Thiam could make the tough decisions that had eluded predecessor Brady Dougan. This included cutting back in investment banking, doubling down on wealth management and catching up to peers on capital, all of which Thiam has pursued.

But uncertainty over how the bank will grow revenue enough to meet 2018 pre-tax income targets and concerns Thiam may need to ask the market for more cash have accelerated Credit Suisse's share price fall, one of the biggest of all large investment banks this year.

Inside the bank the share price drop and the prospect of 6,000 layoffs have hit morale, particularly at the investment bank which is facing the biggest cuts, current and former executives told Reuters.   Continued...

 
Chief Executive Tidjane Thiam of Swiss bank Credit Suisse speaks to the media during a news conference in Zurich, Switzerland May 10, 2016.  REUTERS/Ruben Sprich/File Photo