Swiss financial services giant Credit Suisse (CS, Financial) has a new boss and the switch couldn’t have come sooner. French national Tidjane Thiam, formerly with Prudential Plc (LSE:PRU), will replace American Brady Dougan. Dougan has been with Credit Suisse since 2007 as the first American CEO. Though he is credited with having helped Credit Suisse through the 2008 financial crisis, he was under severe pressure after the investment company put up one of the lowest scores among European banks in 2014. Since then, calls for his ousting have grown louder as the bank continued to grapple with declining profits and weakened capital base.
Evidence suggests that it isn't Dougan’s bad performance, but Thiam’s great credentials and even better experience that will see him moving up with Credit Suisse. Banking and investment sector analysts view the move as a strategic reshuffle to remove the blight of recent scandals on the Swiss investment house. So, what is the market’s reaction on the new appointment which will take shape after regulatory approval? Let’s read further to decipher the facts.
A man with rich acumen
Thiam oversaw and operated UK’s largest insurance business since 2009. His “extensive international experience, including in wealth and asset management and in the successful development of new markets, provides a firm foundation for leading Credit Suisse. As CEO, he led Prudential to great success in challenging times,” Bloomberg Business quotes Chairman Urs Rohner as having stated.
Thiam’s experience in Asia would help Credit Suisse establish itself in one of its key target markets, believes London-based analyst Alevizos Alevizakos at Keefe, Bruyette & Woods Inc. Banking and business analysts are regarding Thiam as the “breath of fresh air” for the embattled Swiss financial service provider that needs to make the right shift away from investment banking.
The 52-year-old headed the European unit of Prudential, after having worked with Aviva Plc (LSE:AV.B) as an executive. He also has experience of having been a consultant to banks and insurance companies such as McKinsey & Company Inc.. The Ivory Coast-native has also worked with the government in Ivory Coast as the Director of The National Bureau for Technical Studies and Development and was even appointed Minister of Planning and Development. He left the country in 1999 before the military coup. Jacob Lew, former chief of staff in President Barack Obama’s office, reportedly requested Thiam to work as the head of the private investment wing of the World Bank several times.
Markets welcome strategic switch
Credit Suisse shares had taken a beating this year at the rate of 7.5%. But soon after the inclusion of Thiam as CEO was announced, Credit’s shares jumped up by as much as 9.1%. As of 9:22 am on Tuesday, March 10, Credit Suisse shares were trading 7.2% higher in Zurich.
Thiam has had his run-ins with regulators as well – in 2013, he was at the receiving end of a public censure by UK’s Financial Services Authority, which fined Prudential £30 million for failing to inform the regulator of its intention to buy the Asia wing of American International Group Inc. (AIG, Financial), AIA Group Ltd. However, Chairman Paul Manduca seems to have only nice things to say about Thiam, and terms him as one of Prudential’s “most exceptional leaders”.
Final thoughts
Market watchers and industry analysts view the new CEO appointment at Credit Suisse with excited anticipation. Meanwhile, Dow Jones’ news wire Market Talk speculates that Mike Wells, head of Prudential’s Jackson National Life insurance unit in the U.S., will be taking Thiam’s place in the insurance company. A formal announcement is still awaited on this. But one thing is clear, that Thiam’s entry into Credit Suisse has received a warm welcome from the stock market investors who are expecting the Swiss financial company to show a turnaround as soon as possible.
