Via Financial Times

Credit Suisse chief executive Tidjane Thiam has lost a high-stakes power struggle to keep his job, as the bank’s board faced down pressure from UK and US investors lobbying for chairman Urs Rohner to quit instead.

The bank’s board announced it had “unanimously accepted” Mr Thiam’s resignation on Friday morning.

Thomas Gottstein, the current head of Credit Suisse’s home business in Switzerland, will take over as chief executive. Mr Gottstein will be the first Swiss national to head the bank since Lukas Mühlemann stepped down in 2002.

The relationship between Mr Thiam and Credit Suisse’s 60-year-old chairman, who recruited him in 2015, broke down in the wake of a spying scandal last year.

The bank hired a corporate espionage company to follow Iqbal Khan, its former wealth management head, and one-time heir apparent to Mr Thiam, who defected to rival UBS.

The surveillance was uncovered by Mr Khan, resulting in a dramatic public confrontation in the centre of Zurich. Lurid revelations about the bitter rivalry between Mr Thiam and Mr Khan that followed scandalised Zurich’s staid financial community.

Mr Rohner initially supported Mr Thiam in public but his doubts grew after it emerged other departing executives had also been followed.

Thomas P. Gottstein CEO Swiss Universal Bank Member of the Executive Board of Credit Suisse Group AG and Credit Suisse AG since 2015
Thomas Gottstein, Credit Suisse’s new chief executive

The chief executive was cleared of responsibility by an external law firm, but two other executives were fired, including Mr Thiam’s closest confident Pierre Olivier Bouée.

“I had no knowledge of the observation of two former colleagues. It undoubtedly disturbed Credit Suisse and caused anxiety and hurt. I regret that this happened and it should never have taken place,” Mr Thiam said in a statement on Friday. “I have agreed with the board that I will step down from my role as CEO. I am proud of what the team has achieved during my tenure. We have turned Credit Suisse around.”

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Mr Thiam’s departure will set Credit Suisse’s board on a collision course with the bank’s biggest investors, who publicly backed the 57-year old Ivorian in recent days.

Harris Associates, the bank’s largest investor, has been a vocal advocate of Mr Thiam’s, and has spoken publicly at length about the danger of ousting him from his position, blaming the efforts to undermine him on a Swiss clique within the bank, resistant to necessary reforms and hostile to outsiders.

Urs Rohner, chairman of Credit Suisse Group AG, looks on during the Swiss International Finance Forum in Bern, Switzerland, on Tuesday, June 28, 2016. European stocks advanced, snapping their worst two-day losing streak since 2008, as investors speculated that policy makers may take action to shore up markets after the recent rout. Photographer: Michele Limina/Bloomberg
Urs Rohner © Bloomberg

New York-based hedge fund Eminence Capital, which owns about 2 per cent of the stock, earlier this week threatened legal action or a proxy fight against Credit Suisse’s board if they fired Mr Thiam.

“It’s not my preferred action, and I know it will be hard, but we are prepared to dig in and do this,” Eminence founder Ricky Sandler told the FT on Thursday, adding he would consider calling a special meeting of shareholders to oust Mr Rohner. “We have done these types of things before to protect our investments.”

Severin Schwan, the lead independent director on the bank’s board issued a statement in support of Mr Rohner’s ongoing chairmanship.

“Urs Rohner has led the board commendably during this turbulent time. After careful deliberations, the board has been unanimous in its actions, as well as reaffirming its full support for the chairman to complete his term until April 2021,” he said.