Embattled Credit Suisse’s CEO to Resign After $1.7 Billion Loss

If you pitched a TV drama featuring all the upheaval at Credit Suisse in the last three years, network executives would dismiss the plot as ridiculous and far-fetched.

On Wednesday, the drama kept coming. CEO Thomas Gottstein announced he will step down next week to clear the way for new management after the bank posted its third quarterly loss in a row.

Everything-gate

Credit Suisse has brought the world more scandal of late than TMZ. The investment bank spied on current and former staff, and earned a rare rebuke from Swiss authorities last year after misleading them about the espionage during an investigation. The bank also lied to investors about corrupt loans to Mozambique, which the bank hid from the International Monetary Fund, contributing to the country’s economic collapse, according to US and British authorities who levied $547 million in fines last year.

It doesn’t stop there, not even close. In June, a Swiss court handed down a criminal conviction to Credit Suisse for laundering drug money and, when the war in Ukraine broke out, the bank raised the ire of US officials for asking investors to destroy documents linking Russian oligarchs to yacht loans. We haven’t even gotten to the billions Credit Suisse lost on the collapse of clients Archegos Capital and Greensill Capital in their own scandals. To say the least, incoming CEO Ulrich Koerner has his work cut out for him:

• With Gottstein out, the Swiss lender will have cleared house on its entire executive team in 18 months. Koerner, who was brought in last year to lead the asset management division after the Greensill debacle, is one of several bankers Credit Suisse hired away from more conservative rival UBS, a sign that it’s trying to leave its, let’s say eccentric, recent past behind.
• The Zurich-based bank’s latest quarterly loss, in the three months to June, was driven by higher losses at its investment banking and trading units and (shock) rising litigation expenses. Net outflows in the latest quarter totaled 7.7 billion francs, a sign of less faith from investors.

The Turnaround Plan: Credit Suisse shut down most of its prime brokerage services last year and, on Wednesday, announced a strategic review to scale back its investment bank and cut costs. Last year, the bank said it wanted to focus more on wealth management, though revenue in that segment fell 34% in the latest quarter. There’s an in-house scandal they should get on stat.