Banks

The 'storm has not receded' for Credit Suisse ahead of Thiam's swan song

Key Points
  • Tidjane Thiam's departure comes amid an investigation by Swiss regulator FINMA following two instances of former Credit Suisse employees, including former wealth boss Iqbal Khan, being placed under surveillance.
  • The outgoing CEO has maintained that he was not aware of the spying operation, which led to the resignation of COO Pierre-Olivier Bouee and the suicide of a private investigator.
  • Thiam is set to deliver the bank's full-year earnings report on Thursday before stepping down at the end of the week.
Tidjane Thiam, chief executive officer of Credit Suisse, speaks during an earnings news conference in Zurich, Switzerland, on April 24, 2019.
Stefan Wermuth | Bloomberg | Getty Images

Credit Suisse CEO Tidjane Thiam will deliver his final earnings report at the helm of the Swiss lender on Thursday, less than a week after his resignation was announced.

Thiam's departure comes amid an investigation by Swiss regulator FINMA following two instances of former Credit Suisse employees, including former wealth management boss Iqbal Khan, being placed under surveillance.

The outgoing CEO has maintained that he was not aware of the spying operation, which led to the resignation of COO Pierre-Olivier Bouee and the suicide of a private investigator, prompting concerns over how both Thiam and Chairman Urs Rohner were kept out of the loop.

Bruno Verstraete, partner at Zurich-based asset manager Lakefield Partners, said the timing of Thiam's ouster had come as a surprise, and suggested that an acceleration of the FINMA investigation could have been the catalyst.

"This spying scandal has gone on for months and what we are seeing is that after the weekend the storm has not really receded, in fact quite the contrary," Verstraete told CNBC's "Squawk Box Europe."

"It looks as if the pressure now is away from Thiam, who has a good leaver agreement with the bank, and that the pressure is now on the highest organ of the company, which is Rohner."

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Severin Schwan, the independent director of the board, said alongside the announcement on Friday that Rohner maintained the board's full backing as chairman until the end of his tenure in April 2021. However, the ousting of Thiam contradicted calls for support for the embattled CEO from major shareholders Eminence Capital, Silchester International and Harris Associates.

"It is very hard to imagine that you don't know about it and that as such is already a bad sign, and did apparently bring FINMA into the game, because as the highest organ you are supposed to know about this," Verstraete added.

Credit Suisse acknowledged the reputational damage brought about by the spying scandal, but since the news of Khan's complaint to Swiss police emerged in September, the lender's shares are up by around 5% and net inflows have not been impacted materially.

Filippo Alloatti, senior credit analyst at Federated Hermes, told CNBC Monday that reputational damage of this magnitude "takes some time to filter through," but added that Thiam's restructuring of the bank had largely been successful in setting the trajectory back toward growth.

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Credit Suisse reported higher-than-expected net income of 881 million Swiss francs ($886.9 million) for the third quarter of 2019 and doubled its return on tangible equity year-on-year. At the time, the group warned of headwinds from a "challenging geopolitical environment," but some of that risk associated with the U.S.-China trade war and Brexit uncertainty has since abated.

The bank's major shareholders have yet to comment on whether they will review their stakes following the announcement of Thiam's departure, and shareholders will be hoping for clues as to the underlying reasons behind the decision on Thursday.