What started as an embarrassing tabloid scandal at Credit Suisse Group AG has suddenly emerged as a very real threat to the bank’s top executives, including Chief Executive Officer Tidjane Thiam.
Outside investigators are reporting directly to Chairperson Urs Rohner, who will move swiftly to take punitive action against the institution’s senior officials if they’re found to be responsible, a person familiar with the situation said, asking not to be identified because of the sensitivity of the matter.
The drama stems from a public confrontation last week in Zurich between Iqbal Khan, an ex-top Credit Suisse banker who had been feuding with Thiam, and detectives hired by the lender to shadow him. The operation was ordered to prevent Khan from poaching private bankers to take to his new employer, crosstown rival UBS Group AG, according to people familiar with the matter.
Among the key questions is who authorised the hiring of the private investigators to follow Khan and who subsequently knew about it.
The scandal risks shattering a period of relative calm for Credit Suisse - and Thiam - after the bank recently completed a three-year restructuring. The lender had enjoyed better results at the volatile global markets business and seen revenue from securities trading rise recently even as peers posted declines, giving a boost to Thiam.
But that’s history now that the rift between Thiam and Khan, which had been an open secret for months in the corridors of Credit Suisse’s imposing Zurich headquarters, has become the talk of the town.
Tensions between the men had already hit a low point in January during a party at Thiam’s house in the upscale neighbourhood of Herrliberg outside Zurich when the two men had an argument, people familiar with the situation said.
As with so much in the saga, the two sides give a different version of events. The Swiss daily Tages-Anzeiger, citing unidentified people close to Thiam, said the argument had been “a personal thing”; people close to Khan, who ran the key international wealth-management unit, were quoted as saying that the CEO had grown increasingly exasperated with the younger executive’s success and the fact that he had taken on the role of “crown prince” in a possible CEO succession.
Relationship has soured
What’s not in dispute is the relationship between Khan and Thiam had soured in the months before his exit in July. When a corporate reorganisation came in February, Khan’s responsibilities stayed the same, even as two colleagues were elevated to the executive committee. Tensions mounted as Khan’s name surfaced in media reports as a candidate to replace Bernhard Hodler as head of Julius Baer. That job eventually went to Philipp Rickenbacher, a little-known internal candidate.
Both Thiam and Rohner, announcing the internal probe on Monday, said that they’re confident that the “truth will emerge,” according to a memo seen by Bloomberg. The lender said media coverage contained inaccuracies and “sensationalized both facts and events.” A follow-up release specified that Rohner would be in charge of the investigation.
A spokesman for Credit Suisse declined to comment. The shares fell 1.9% in Zurich on Wednesday. They’re down about 6% so far this week, paring the gain for the year to 12%.
The case is also making its way into the city’s legal system. Zurich prosecutor said on Friday it had launched criminal proceedings in response to a complaint from Khan, who said he was threatened. The prosecutor declined to comment further, citing ongoing investigations.
UBS has been running due diligence checks on Khan as recently as today, that bank’s chairman, Axel Weber, said on Bloomberg TV on Wednesday.
“We have made our due diligence, believe me, as a bank in making close contact and making sure that there will be no regret moves,” Weber told Bloomberg TV in an interview with Matthew Miller in Zurich. He added that Khan hadn’t started his new job at UBS and the matter was between him and Credit Suisse.