Credit Suisse has ousted two senior bosses and scrapped bonuses for its remaining executives as it takes drastic measures to come back from the blow-ups of Archegos Capital Management and Greensill Capital which are set to cost the investment bank billions of pounds.
Chief risk and compliance officer Lara Warner will relinquish her role effective immediately, while investment bank CEO Brian Chin will step down from the executive board by the end of the month.
The high-profile dismissals come as the investment bank braces for a $4.7bn (£3.4bn) hit following the collapse of Archegos Capital Management for which it acted as one of the prime brokers.
The demise of the former hedge fund manager Bill Hwang’s family office is expected to push Credit Suisse to a Q1 loss of CHF 900m (£692.8m).
It is also reeling from the fallout of Greensill Capital, Lex Greensill’s supply chain finance company which filed for insolvency last month. Credit Suisse suspended $10bn worth of funds linked to the firm due to valuation concerns and has since warned clients could lose up to $3bn from the frozen funds.
Spared executives to see their bonuses scrapped
The executives who have been spared, including top boss Thomas Gottstein, will see their bonuses scrapped this year. This includes both their short-term incentive compensation based on performance for 2020 as well as their long-term bonuses which would have been calculated over the three-year period from 2021.
Outgoing chairman Urs Rohner has also agreed to waive his CHF 1.5m chair fee which he would have been awarded at the 2021 AGM.
In addition, the wealth manager and investment bank has frozen its CHF 1.5bn share buyback programme and slashed its dividend by two thirds to CHF 0.10 a share.
The board of directors has also launched two investigations to be carried out by external parties to suss out the events leading up to the Archegos and Greensill losses.
‘Serious lessons will be learned’
“The significant loss in our prime services business relating to the failure of a US-based hedge fund is unacceptable,” chief executive Gottstein said.
“In combination with the recent issues around the supply chain finance funds, I recognise that these cases have caused significant concern amongst all our stakeholders.
Gottstein continued: “Together with the board of directors, we are fully committed to addressing these situations. Serious lessons will be learned. Credit Suisse remains a formidable institution with a rich history.”
Despite the impending loss from the Archegos collapse, Credit Suisse said its investment banking business was in good shape with all three wealth management divisions and its asset management arm seeing an increase in year-on-year profits and positive net flows in the first quarter.
Interim appointments
In the interim Warner will be replaced by Joachim Oechslin as chief risk officer, while Thomas Grotzer will take over as global head of compliance, the investment bank said.
Christian Meissner, currently co-head of international wealth management investment banking advisory, will replace Chin on 1 May.
Both Warner and Chin had been at Credit Suisse nearly two decades with Warner joining as an analyst from Lehman Brothers in 2002 and Chin joining from Deloitte in 2003.
Warner served as Credit Suisse’s chief financial officer for six years before becoming chief risk and compliance officer in October 2015. Chin was promoted to investment bank CEO last August after being global markets boss for four years.
