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15th May 2022

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Credit Suisse chair Horta-Osório says bank’s crisis is worst he has seen

Credit Suisse’s new chair António Horta-Osório promised an urgent review of risk management, strategy and culture at the bank, which has been left reeling by losses from implosions at Greensill Capital and Archegos.

The Portuguese banker told investors on Friday that the problems at Credit Suisse were more serious than anything he had experienced in his career, which includes marshalling Lloyds Banking Group in the UK after its government bailout.

“I have personally worked at and led several banks in different countries and have lived through many crises,” he told the annual general meeting. “What has happened with Credit Suisse over the last eight weeks, with the US-based hedge fund and the supply chain finance funds matters, certainly goes beyond that.”

The collapse of Archegos alone, a family office that borrowed billions from unwary banks to boost its returns, forced Credit Suisse to declare a SFr4.4bn ($4.8bn) loss last week and instigate a SFr1.7bn capital raising.

In March, the bank froze $10bn in supply chain finance funds linked to Greensill. Total losses from the funds are expected to be about $1.5bn. Clients of the bank are preparing legal action.

Before the meeting, Credit Suisse announced that the head of its risk committee, Andreas Gottschling, would step down ahead of a threatened shareholder rebellion.

Credit Suisse’s board has already removed Lara Warner, chief risk and compliance officer, Brian Chin, the head of its investment bank, and several mid-level risk managers and traders responsible for the losses.

“Current and potential risks of Credit Suisse need to be a matter of immediate and close scrutiny,” said Horta-Osório at the AGM. “I firmly believe that any banker should be at heart a risk manager.”

He said he would work with the bank’s board and management team in the coming weeks to carry out an “in-depth assessment of the bank’s strategic options” and review whether the “right incentives . . . including on remuneration” were in place.

The crises have capped a difficult year for Credit Suisse, following the departure of its former chief executive Tidjane Thiam, who resigned in February 2020 after a corporate spying scandal and a boardroom feud with outgoing chair Urs Rohner.

During the AGM, where Rohner stepped down after 10 years as chair, he revealed the board had “received some very critical questions and comments” from shareholders over the Greensill and Archegos affairs.

“The inexcusable losses that we have had to inform you about in recent weeks have cast a shadow,” Rohner said. “We’ve disappointed not just our clients but also our shareholders, and not for the first time unfortunately. I offer my apologies for this.”

The Financial Times revealed this week that several of Credit Suisse’s biggest shareholders were preparing to vote against Gottschling’s re-election as a director of the bank.

David Herro, vice-chair of Harris Associates, which owns just over 10 per cent of the bank, told the FT he was surprised Gottschling had not resigned already. Herro has been a vocal critic of the board’s steering of Credit Suisse since Thiam’s departure.

Last week, influential proxy adviser Glass Lewis advised shareholders to vote against Gottschling, who has served as chair of the risk committee since 2018. The 53-year-old German earned a $1m annual fee. He is also a director at Deutsche Börse and the former chief risk officer of Erste Bank.

His role will be taken on an interim basis by Richard Meddings, the former Standard Chartered executive who already runs the audit committee.

2021-04-30 06:59:18

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By admin