CREDIT SUISSE IN CRISIS
■ Top executives axed after Greensill and Archegos disasters ■ Bonuses withdrawn as bank dives into the red
TOP executives have been fired and bonuses slashed at Credit Suisse as the bank reels from twin crises at two rogue clients.
The european lending giant slumped to a £690m loss in the first quarter of the year following scandals at Archegos and Greensill Capital.
Credit Suisse provided prime broking and financial services to hedge fund Archegos, which blew up last month after bets it made on stocks unravelled.
The Swiss bank was also left heavily exposed to lender Greensill, which was founded by controversial Australian businessman Lex Greensill and advised by David Cameron but collapsed in early March.
Credit Suisse said it would lose £3.4bn from Archegos but has not yet put a figure on Greensill – meaning there could be further pain to come.
As a result the bank’s senior executives have had their bonuses for the year withdrawn, while outgoing chairman Urs Rohner waived his £1.1m fee.
Chief risk and compliance officer Lara Warner and the investment bank head Brian Chin have both been axed.
Both were key allies of chief executive Thomas Gottstein, who took over from Tidjane Thiam in February last year but could find himself in the firing line when outgoing Lloyds boss Antonio HortaOsorio takes over as Credit Suisse chairman next month with a major clean-up job on his hands.
Gottstein said: ‘The significant loss relating to the failure of a USbased hedge fund is unacceptable.’ He added: ‘In combination with the recent issues around the supply chain finance funds, I recognise that these cases have caused significant concern amongst all our stakeholders.
‘Serious lessons will be learned. Credit Suisse remains a formidable institution with a rich history.’
The departures of Warner and Chin are a serious embarrassment for the bank and Gottstein as the board continues to investigate what went wrong.
Many have pointed the finger at Warner who was responsible for analysing the risk of both Archegos and Greensill and who was personally involved in signing off on a loan to Lex Greensill in October.
The collapse of Greensill has proved highly embarrassing for Cameron who became an adviser to the company in 2018 and received share options that could have been worth millions of pounds – but are now worth nothing.
Greensill was also the main financial backer of Liberty Steel owner GFG Alliance, the sprawling business empire of Sanjeev Gupta.
There are now concerns about the future of Liberty Steel, which has 3,000 staff at plants across the UK.
Warner’s demise will have sent ripples through compliance departments at bank’s across the globe.
Warner was highly thought of at Credit Suisse, having worked her way up from a role as analyst when she joined from Lehman Brothers in 2002.
The dual Australian and US national was a close confidante of former boss Thiam and under him she moved from New york to Zurich for the top compliance job in 2015.
She was promoted again by Gottstein last summer when the risk and compliance departments were combined.
Likewise, Chin also benefited from Gottstein’s reshuffle and was promoted from his jobs as head of global markets to lead the investment bank.
Question marks have now been raised over Gottstein himself and his ability to judge character after he promoted them both. There are suggestions that Horta-Osorio may look elsewhere for a trusted lieutenant to clean up the bank. One bank analyst said: ‘I wouldn’t be surprised. Antonio has a reputation and will want to make an impact straight away. This is a big blow-up that has cost the bank billions.’
The analyst added that HortaOsorio has a mammoth job if he is to turn around a bank that has been in disarray for some years.
Thiam was ousted in the wake of a saga involving corporate espionage that sent shock waves through Switzerland’s famously discreet banking community.
He resigned after losing a boardroom battle that erupted when the bank admitted to having hired private detectives to spy on former staff.