Credit Suisse prepares for senior management changes after a year of crisis

Business

Ian Krysztofiak, Staff

Header Image: CNBC
Credit Suisse building in Zurich Switzerland.

The Swiss investment bank Credit Suisse (NYSE: CS) reportedly has plans to replace some of its senior management positions in the coming months after the chief financial officer, general counsel and Asia-Pacific head are set to step down. Chairman of the board, Axel Lehmann, is hoping to put the bank back on stable ground after recent losses and scandals. Credit Suisse was founded in the 1800s to fund the Swiss railway system, but has since grown into a double digit billion dollar holding company with reaches into nearly every international market.

Credit Suisse is planning to replace Chief Financial Officer David Mathers, Chief Legal Officer Romeo Cerutti and the CEO of the Asia-Pacific region Helman Sitohang. Mathers has been in this role since 2010 and Cerutti has been the bank’s top lawyer since 2009. The board has yet to make any decisions. 

Credit Suisse is expected to take a loss in the first quarter of 2022 after recent litigation provisions and losses on loans through Russia’s invasion of Ukraine. Credit Suisse is looking to scale back its investment banking division and sharpen its focus on wealth management. They are also looking “to stabilize the bank through cultural and strategic changes,” said chairman Axel Lehmann.

Lehmann has only been at the helm of the board since January, as the former chairman Antonio Horta-Osorio resigned due to breaking COVID-19 quarantine requirements by attending football and tennis matches. Hort-Orsorio was at Credit Suisse for less than a year before he resigned from the board. 

Credit Suisse reported a net loss of 1.57 billion Swiss francs ($1.7 billion) for 2021. This comes after a 5.5 billion loss resulting from its risky exposure to the hedge fund Archegos Capital, which resulted in the firing of nine executives and disciplinary action against another 24 executives. They also suffered fines of $475 million for their role in the “tuna bond” scandal in the Republic of Mozambique. The firm helped arrange loans to Mozambique that were said to be used for a state owned tuna fishery and maritime commerce and security projects, but were aware that portions of he money would be used for military projects. Credit Suisse received $50 million worth of kickbacks for their bankers in exchange for better loan terms, while Mozambique officials used the funds to finance military expansion instead of the promised fishing fleet. 

Credit Suisse was unable to make a profit in 2021 during the most profitable years for financial institutions. Though with an increased focus on cultural changes, decreased investment banking activities and new management changes, only time will tell if they can rebound from their calamities.

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