Credit Suisse overhauls crisis-hit top executive team

Move comes as Swiss lender reports dramatic fall in revenue in first quarter of the year

Credit Suisse has announced a sweeping overhaul of key executive roles as the Swiss lender steps up its effort to move on from a succession of crises that helped drive it to a first-quarter loss.

The Swiss bank's chief financial officer, head of Asia Pacific and general counsel will all be replaced, completing a revamp of its executive board over the past year that has only spared chief executive Thomas Gottstein and the head of its domestic bank.

In a surprise move Credit Suisse also said that Francesca McDonagh would join as head of Europe, the Middle East and Africa less than 24 hours after she announced her departure as chief executive of Bank of Ireland.

The changes come as Credit Suisse tries to draw a line under the twin scandals involving failed supply chain finance group Greensill Capital and defunct family office Archegos that engulfed it last year. The crises led to $10 billion (€9.4bn) of clients' assets being frozen and a $5.5 billion trading loss, the biggest in the bank's 166-year history.

David Mathers, who has been finance chief since 2010, will leave the group once a successor is found. Helman Sitohang, head of Apac, will be replaced in June by Edwin Low, co-head of investment banking in Apac, while general counsel Romeo Cerutti will leave the bank in July, making way for Markus Diethelm, who previously held a similar role at UBS.

Tighten controls

Mr Sitohang will take on a new role advising Gottstein and focusing on key clients.

Mr Gottstein said on Wednesday the bank’s decision to tighten its controls and risk appetite following the crises “had an adverse impact on our net revenues” in the first three months of the year.

Its revenues fell 42 per cent to 4.4 billion Swiss francs (€4.3bn) in the quarter from the same period last year, driven by a 51 per cent decline in investment banking revenues and 44 per cent drop in wealth management. Overall it reported a SFr428 million loss for the quarter, compared with a SFr757 million loss a year earlier tied to the implosion of Archegos.

Credit Suisse last week revealed it had set aside a further SFr600 million for litigation provisions in the first quarter, taking the total to SFr703 million for what it described as developments in legal matters that started more than a decade ago.

Mr Gottstein, who has insisted he is best placed to lead the bank through what it has described as a transition year, added that “the first quarter of 2022 has been marked by volatile market conditions and client risk aversion”.

Credit Suisse said it had reduced its net credit exposure to Russia – which included derivatives and financing exposures in its investment bank, trade finance exposures in its domestic Swiss bank and loans in its wealth business – by 56 per cent since the end of 2021 to SFr373 million.

Russian invasion

However, its losses tied to Russia's invasion of Ukraine hit SFr206 million in the quarter, made up of SFr148 million of trading losses and SFr58 million of provisions for credit losses.

Flora Bocahut, an analyst at Jefferies, said while the overall quarterly loss was expected following the profits warning last week, "the detailed release today is another negative surprise".

“The investment bank, even on an adjusted basis, is loss-making this quarter . . ..This is particularly noteworthy as most peers have reported strong investment banking results,” she added.

Credit Suisse and its new chair Axel Lehmann face a high-stakes annual general meeting on Friday, with several large investors having announced they will vote against the bank on a range of issues, from discharging executives of their legal responsibilities to a special audit of the company and a climate proposal. – Copyright The Financial Times Limited 2022