Wednesday 5 February 2020 4:26 pm

Credit Suisse shareholders back chief executive in board battle

Three top Credit Suisse investors have backed chief executive Tidjane Thiam in a power struggle with chairman Urs Rohner as the Swiss bank grapples with the aftermath of a spying scandal. 

Relations between the pair are understood to have come under increased strain since the revelation that the bank had hired a corporate espionage agency to tail former executive Iqbal Khan after he defected to rival UBS last summer. 

Read more: Credit Suisse admits to spying on second executive

Reports that Rohner was drawing up a shortlist of potential candidates to replace Thiam, a former head of financial services giant Prudential, have intensified the battle ahead of a key board meeting on Thursday, according to the Financial Times. 

David Herro, chairman of the bank’s largest shareholder Harris Associates, which owns 8.4 per cent of the bank, told the paper: “We are at the stage now where it is one or the other”.

London-based Silchester International Investors, which said it owns 3.26 per cent of Credit Suisse, said that Rohner should consider resigning if he did not support Thiam.

Silchester said it was “not aware of any reason” why Thiam should not continue to have the “full support” of Rohner and the rest of the bank’s board, and added that the chairman should either “retire as planned” in 2021, or sooner if he “feels unable to continue to support the CEO”.

Sign up to City A.M.’s Midday Update newsletter, delivered to your inbox every lunchtime

US hedge fund Eminence Capital has written to Credit Suisse’s non-executive directors to warn them against pursuing “a personal agenda with respect to the CEO rather than act[ing] in a responsible fiduciary way,” the FT reported, in a letter that also threatened legal action against the bank’s board. 

Speaking to the FT, Herro urged the board to base a decision on the two men’s track records. “Don’t listen to what Urs is telling you. Who do you want to keep — the guy who caused the problems, or the guy who is fixing them?”

Citing Credit Suisse’s former legal issues — including a $5.3bn settlement with the US justice department over the sale of toxic mortgage bonds, as well as its involvement in Mozambique’s so-called tuna bonds scandal — he added: “All of these things the chairman presided over; he was legal counsel when all the pain occurred”.

Read more: Tailed in Zurich: How the Credit Suisse spy drama unfolded

In a Bloomberg TV interview on Monday, Herro suggested that Thiam, the first black chief executive of the Swiss bank, could be encountering racism. 

“To be very frank, it seems [like] envy from competitors or perhaps something else given that Mr Thiam looks a little bit different than the typical Swiss banker. Either one of these two rationales behind these attacks against him, to me are extremely distasteful,” he said. 

Credit Suisse declined to comment.