Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Horta-Osorio's broken promise the final straw at embittered Credit Suisse

Stock MarketsJan 18, 2022 03:06AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: Antonio Horta-Osorio, Group Chief Executive of Lloyds Banking Group, speaks at the Institute of Directors convention in London, Britain, October 6, 2015. REUTERS/Toby Melville/ 2/2

By Oliver Hirt, Sumeet Chatterjee and John O'Donnell

ZURICH/FRANKFURT/HONG KONG (Reuters) -After taking over as chairman of Credit Suisse (SIX:CSGN), Antonio Horta-Osorio pledged to develop a culture of personal accountability at the Swiss bank following a string of scandals.

That promise ultimately sealed his fate as he was forced to resign https://reut.rs/3roQ4D4 after barely eight months in office for flouting coronavirus quarantine rules in both Britain and Switzerland.

It marked the end of his attempts to reform Switzerland's second-biggest bank, still dealing with the fallout from a slew of earlier failings https://www.reuters.com/business/finance/spies-lies-chairmans-exit-credit-suisses-scandals-2022-01-17, from spying on executives to investment losses running into billions of dollars.

After resigning, Horta-Osorio expressed regret that his "personal actions ... compromised my ability to represent the bank internally and externally". His spokesperson said he would not be speaking to the media.

It was just days after promising to clean up the bank by creating a sense of responsibility that Horta-Osorio flew to London in a private jet to attend the Wimbledon tennis finals, breaking https://reut.rs/3qCHTDG Britain's coronavirus quarantine rules in the process, three people with knowledge of the matter said.

When the breach came to light at the end of last year, Horta-Osorio had already been called out for a similar quarantine transgression in Switzerland and the bank was scouring his record for any other violations.

An internal investigation also looked at the Portuguese banker's use of company jets. He had directed a corporate plane to drop him off in the Maldives on the way back from a business trip in Asia, two people familiar with the matter said.

The episodes strengthened the hand of senior managers bristling at what they saw as his interference in strategy, making it all but impossible for the chairman to prevail in a tug-of-war with executives at the bank he had been brought in to overhaul.

UNFORGIVING BACKDROP

Horta-Osorio explained his Wimbledon lapse by saying he was unaware he had failed to get the business waiver for British rules his office had asked for, laying the blame on staff who he said did not inform him, one of the people said.

He had intended to take Credit Suisse clients to the tennis tournament and then gave two tickets to his children when customers bowed out due to the pandemic, the person said.

But his defence, coming in the wake of a public apology in December for breaking Swiss quarantine rules, fell flat.

The breaches took place against an unforgiving backdrop of growing hostility among Credit Suisse's senior executives, many of whom resented the chairman's efforts to reform, people familiar with the matter said.

Horta-Osorio suspected details of his transgressions were leaked by people in that group, said one of those people, describing "antipathy" towards him within the bank. One person said the chairman had been at "war" with key members of the executive board.

Credit Suisse declined to comment on whether there were rifts between the former chairman and the executive board, including Chief Executive Thomas Gottstein. The bank has not published its investigation into Horta-Osorio.

Another person who attends the bank's high-level meetings said Horta-Osorio, unlike his predecessor Urs Rohner, had questioned executives closely when they gathered every quarter to review the bank's performance.

During discussions with management about the second quarter of last year, he persevered with pointed questions about the wealth management business and growth projections, asking to see the data on which the forecasts were made, one source said.

"There were quite a few red faces," the person said.

He said many senior employees were unhappy with Horta-Osorio's attempts to make the board of directors more powerful at the expense of executives.

'ORCHESTRATED CAMPAIGN'

As well as burning bridges with top bankers, the quarantine breaches prompted widespread criticism of the Portuguese banker in Switzerland, where Credit Suisse is regulated and where one in three of 49,000 staff work.

One of the people who spoke to Reuters said Horta-Osorio had been taken aback by the hostility he encountered while in Switzerland.

Horta-Osorio's abrupt departure now leaves a question mark over the bank, as its stock price continues to dwindle and amid renewed speculation that it could become a takeover target for its stronger neighbour UBS, or a foreign bank.

David Herro of Harris Associates, one of the bank's largest shareholders, had backed Horta-Osorio even after the quarantine transgressions came to light https://reut.rs/33HtTzR, describing his role in turning the bank around as an important reason to invest.

"There is an orchestrated campaign because there are constituents who don't want to see a strong rebounding Credit Suisse," he told Reuters before the resignation, adding that Swiss media had been kinder to his Swiss predecessor.

In recent days, Horta-Osorio had tried to salvage the situation, said one person.

He had successfully battled through a similar embarrassment as chief executive of Britain's Lloyds (LON:LLOY) Bank after a newspaper reported that he was having an extra-marital affair while travelling on business.

In an email sent to Lloyds staff in 2016, Horta-Osorio made clear he had not breached the bank's rules by mixing business with personal expenses, and showed contrition.

"Having the highest professional standards raises the bar against which we are judged," he wrote. "I don't expect anyone to get everything right all the time. The important point being how we learn from those mistakes."

In Switzerland, his apologies rang hollow.

Horta-Osorio's broken promise the final straw at embittered Credit Suisse
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email