A storm in a Swiss bank

Arow at a party, a breakdown in professional relationships and a confrontation with private detectives. Reports of clashes between Credit Suisse CEO Tidjane Thiam and erstwhile colleague Iqbal Khan have created lurid headlines in Switzerland.

The controversy raises questions about leadership at the listed Swiss bank. Credit Suisse disputes the veracity of some allegations. The damage to its credibility may still be serious. Swiss bankers rely on their reputation for professionalism. They have long stopped facilitating tax evasion. Wealthy clients pay for discretion and trustworthiness. The promise of superior returns is an added lure.

Since Thiam became CEO in July 2015, the returns on Credit Suisse’s own shares have been underwhelming. They have fallen 44%. This is partly because he unearthed old problems. Relative to tangible book value, Credit Suisse stock trades at a respectable 0.7 times.

A smart, determined former insurance boss, Thiam has successfully tilted Credit Suisse towards managing the wealth of the world’s richest, downsizing its investment bank. He appointed Khan as head of international wealth management, which generated pretax income of SFr444m on revenues of SFr1.4bn in the second quarter.

The row suggests boundaries between professional and personal became unhelpfully blurred. CEOs have to keep smart subordinates hungry while managing their expectations. Khan was tipped as a successor to Thiam, who has, however, shown no signs of leaving. Khan’s own departure from Credit Suisse was announced in July. His exit now looks inelegant, to say the least.

Credit Suisse chair Urs Rohner has launched an investigation. The resulting report should avoid excuses. The bare facts and the conclusions should be published. If there are flaws in the culture of the bank, this is an opportunity to remedy them. /London, September 26

© The Financial Times 2019