After weathering the financial crisis, Brady Dougan is now finding himself under scrutiny and is likely to be replaced by Tidjane Thiam, CEO of Prudential insurance. Swiss banks are coming under fire these days after several high-profile misdeeds.
Laura Noonan and Patrick Jenkins had this story for The Financial Times:
Mr Thiam, who has led the Pru since 2009, previously worked at fellow insurer Aviva and before that as a management consultant at McKinsey. The Ivory Coast-born executive has not worked in banking, but is one of the most respected figures in the City of London.
An announcement could come as early as Tuesday morning, according to those briefed on the plan.
Mr Dougan is one of the longest-standing bank chief executives, having led Credit Suisse since before the financial crisis. He has come under pressure over the direction of Credit Suisse in recent years, particularly over a shake-up of the group that has been less far-reaching than one undertaken by Swiss rival UBS.
Swiss banks have come under renewed scrutiny this year after the dramatic surge in the value of the Swiss franc in the wake of the removal of the central bank’s currency peg with the euro, and amid expectations of another round of regulatory gold-plating.
The New York Times story by Jessica Silver-Greenberg and Jenny Anderson reported that the change comes after the bank settled tax evasion charges in the U.S.:
The change at Credit Suisse follows recent stumbles. Last year, the Zurich-based bank, which has large operations in New York, was the first of its size and significance in decades to plead guilty to a criminal charge.
In that settlement with United States authorities, Credit Suisse admitted that its bankers enabled clients to illegally evade American taxes and agreed to pay about $2.6 billion in penalties.
At the time of the plea agreement in May, Mr. Dougan’s job seemed secure. And he could have survived the legal problems if the bank’s financial performance had been better, said the people briefed on the matter, who spoke on the condition of anonymity.
Last month, Credit Suisse reported that it had swung back to a profit in the fourth quarter, earning about $993 million, but it also told investors to brace for continued fallout from the legal settlements.
Bloomberg’s Elena Logutenkova and Sarah Jones had this background about Thiam and also Dougan’s tenure at the top of Credit Suisse, where he had outlasted criticism before:
Thiam joined Prudential from U.K. insurer Aviva Plc, where he was head of the company’s European unit. He worked for management consultant McKinsey & Co. from 1986 to 1994, focusing on insurers and banks. From 1994 to 1998, he was head of the National Bureau for Technical Studies and Development in the Ivory Coast. He was appointed Minister of Planning and Development before leaving the country after the December 1999 military coup.
Dougan, a 25-year veteran of Credit Suisse and the first American to serve as its sole CEO, was one of the few leaders of a global bank to survive the financial crisis and the scandals that followed. On Feb. 26, Standard Chartered Plc named Bill Winters to replace Peter Sands, who led the U.K. firm through the turmoil.
While Dougan’s down-to-earth manner and knowledge of markets have won him the trust of some shareholders, some Swiss media and retail investors repeatedly questioned his loyalties as an American and criticized his pay packages and the fact that he doesn’t speak German. Still, Dougan, 55, kept his post while UBS Group AG, Switzerland’s biggest bank, has had four CEOs in the same period. Zurich-based UBS has been led by Sergio Ermotti since September 2011.
Dougan, who headed Credit Suisse’s investment bank before becoming CEO, has resisted calls for a radical downsizing of the securities unit following UBS’s decision to do so. He instead focused on incremental cuts to the business and costs to improve earnings. The strategy hasn’t paid off for shareholders, with Credit Suisse shares currently trading at about 1.1 times the bank’s tangible book value, compared with 1.4 times for UBS.
The timing for this change is interesting. After weathering the financial crisis as well as other recent scandals and returning the bank to profitability, it’s odd that the board would want to replace Dougan now. It makes you wonder what else is coming and what Thiam is going to have to clean up next.