LONDON – The departure of Credit Suisse chairman Antonio Horta-Osorio has raised concern about whether the embattled lender will stick to its strategic overhaul plans after he was hired to help it deal with the implosion of collapsed investment firm Archegos and the insolvency of British supply chain finance company Greenshill Capital.
ANNA LOZMANN, ANALYST AT RATINGS AGENCY S&P:
“In terms of ESG (environmental, social, and governance issues), the group is a negative outlier compared to Swiss-based peers and compared to domestic peers. And this is broadly due to two facts: their turnover in management and the negative news that they have had over a few years by now.”
ALESSANDRO ROCCATI, SENIOR VICE PRESIDENT AT RATINGS AGENCY MOODY’S IN LONDON:
“Top management and board stability are important factors in order to stabilize CS’s franchise and improve its corporate governance. Given the cultural change required to achieve this objective, we expect that this will take some time including dealing with difference in views and challenges along the way. CS’s corporate governance practices have weaknesses and flaws, and its financial, compliance and risk policies were unable to avoid losses on Archegos and customer relationship issues related to Greensill.”
ANDREW COOMBS, NICHOLAS HERMAN, SAIFUR RAHMAN, ANALYSTS, CITI:
“Credit Suisse can ill-afford another scandal after the events of the past two years and yet now finds its chairman, Antonio Horta-Osorio, stepping down after just eight months in the role, after breaching COVID quarantine rules. Ultimately, Mr Horta-Osorio’s time as chairman will go down as a short footnote in Credit Suisse’s long history. Questions were raised about the appropriateness of his appointment (based on his lack of experience in investment & private banking) and the subsequent strategic review met with mixed reviews, but his departure leaves Credit Suisse with a lack of strong characters at the top and leadership questions will likely be raised. The new chairman, Axel Lehmann, is likely to see a return to a more traditional chairman-CEO relationship and he has already insisted in an interview with Reuters that there will be no change to strategy and that the existing management team will remain in place.”
MICHAEL KUNZ, ANALYST, ZURCHER KANTONALBANK:
“Horta-Osorio had already come under public pressure in recent days after he seems to have taken a dim view of travel regulations in the coronavirus era. His successor brings with him extensive experience in the Swiss banking scene. But whether he will succeed in quickly bringing Credit Suisse into calmer waters, so that the bank can once again fully concentrate on its operative business, remains to be seen in view of the many attempts in this direction in recent years.
“In this respect, there is still no reason to bet on the stocks of the CS Group. We are sticking to our ‘Market Perform’ rating.”
“We think there will be further questions about execution of the recent strategy plan, and whether the franchise will see a further outflow of talent. That said, we think expectations for the group are not high, (the shares trading at 5.9 times 2022 expected underlying earnings), with many investors we speak to already very cautious on the group’s prospects.
“We also think that the strategy that was presented was very much focussed on growth, and we had wanted to see more focus on how the business and risk culture was changing. With the new chairman’s history in risk management we could see greater confidence returning in this area.”
JP MORGAN STRATEGISTS:
“Resignation of Chairman another negative: Remain Underweight.
“We see the resignation of Antonio Horta-Osorio as chairman of CSG post an investigation commissioned by the Board of Directors as a negative outcome for CSG, following on from a series of mishaps in 2021 including Greensill, Archegos. While CSG indicates it will continue to execute its strategy, we believe the ongoing turnover with management changes brings further uncertainty into the Group and strategically it creates uncertainty as well.
Credit Suisse Group also announced that the Board of Directors has appointed Axel P. Lehmann as the bank’s new chairman effective immediately. Axel Lehmann in our view has a well-established profile in Switzerland and he along with the CEO is likely to continue working on improving the risk culture of the Group, something that was highlighted by Antonio Horta-Osorio post his appointment as well. However, we believe these issues at CSG are going to lead to ongoing scrutiny by regulators, group risk aversion and hence implied cost of equity will likely stay high and we reiterate the underweight.”
JUSTIN TANG, HEAD OF ASIAN RESEARCH AT UNITED FIRST PARTNERS, SINGAPORE:
“They have been in the ‘damaged goods’ section for a while now. While Horta was responsible for the new strategy, his short tenure means that the revamp is likely to only be in the nascent stages.
“The irony of it is that Horta was hired to fix the reputational damage to Credit Suisse and revamp its risk taking culture in the bank.
“I don’t think Credit Suisse has much choice over strategy – they need to repair the damage, revamp the culture, regain investor confidence and rebuild the franchise.”
(Reporting by Danilo Masoni in MILAN, Brenna Hughes Neghaiwi in ZURICH and Anshuman Daga in SINGAPORE; Compiled by Saikat Chatterjee)