Tidjane Thiam has proven himself during Credit Suisse's two-year restructuring – but that's not enough for some. An activist investor's demands are a «what now» moment for the CEO.

Credit Suisse boss Tidjane Thiam hasn't responded to a Zurich-based hedge fund which is calling for the bank to split itself into three parts – an investment bank, wealth manager and asset management unit.

In fact, the normally media-friendly CEO has kept an extraordinarily low profile in the months since Credit Suisse tapped investors for 4 billion Swiss francs, scrapped a partial listing of its Swiss business, and set aside a major chunk of litigation in the U.S. over mortgage securities mis-selling.

finews.com took his silence as a positive sign for Credit Suisse's torturous turnaround. Thiam appeared to be hunkering down to work on the bank's next phase, as he later alluded to in a memo to Credit Suisse staff.

Thiam's Fine-Tuning?

Pre-indicators from U.S. banks indicate that Credit Suisse could post a healthy third-quarter result in two weeks, as well as show progress on its restructuring and reduction of risk.

If this enough for investors' longer-term view? RBR, the activist hedge fund, obviously thinks not. Other shareholders are impatient over what they perceive as the stock's too-gradual rise following the revamp. They have also griped over a lack of clarity from Thiam, a brilliant tactician and strategist, over the fine-tuning of Credit Suisse strategy after the heavy lifting is over.

European Unrest

Credit Suisse isn't the only European bank with shareholders grumbling over results and strategy: in Germany, John Cryan has just until May to show better earnings or be replaced.

Rival Commerzbank, in which Germany's government still holds 15 percent following a crisis-time bailout, is being coaxed into the arms of France's BNP Paribas. A deal between the two would cement the European banking union, a product of the eurozone crisis. 

RBR, run by former research analyst and interest rate trader Rudolf Bohli, is a harbinger of more to come, banking insiders says.

Weaker Stock Price

Until now largely insulated from attack by activist investors, European banks are rife for a challenge: while the sector has stabilized, firms still have considerable overcapacity.

This is fertile ground for activists, who can expose holes in strategy by pointing out inefficiencies and calling for deeper strategic changes including spin-offs and disposals.

It's not without irony that investors have been foremost among Thiam's worries. He has repeatedly pled for – and been granted – patience to turn around Credit Suisse, and promised a rising share price once his revamp takes hold. The stock has weakened considerably since he took the job, doubless due to a total of 10 billion francs in capital that Thiam has had to replenish, diluting shareholders.

Storm in a Teacup?

RBR and Bohli's demand for Credit Suisse to split itself up is, as one analyst put it, a storm in a teacup: with just 0.2 percent of stock, the hedge fund simply doesn't have the influence, or support, to impose its views on the bank, as finews.com has reported.

However, the hedge fund's demands highlight that Credit Suisse, under Thiam, has failed to articulate a long-term vision. His ambitious plan to whip Credit Suisse into more efficient shape with stronger emphasis on the low-risk, high-return business with wealthy clients in Asia-Pacific and an investment bank which earns its cost of capital has failed to excite shareholders.

More Than McKinsey

This shouldn't necessarily surprise investors: Thiam quickly shaped a three-year plan for Credit Suisse to look like a mini-UBS, with a somewhat larger credit arm including lucrative areas like leveraged finance.

The only problem? UBS has also failed to ignite an investor frenzy in its shares five years after embarking on its wide-ranging and daring revamp, as finews.com has written. UBS shares have languished under the 20 franc threshhold for years now, much to the chagrin of CEO Sergio Ermotti.

If Thiam wants to escape the same fate and a mini-UBS moniker, he has to reveal details of post-revamp Credit Suisse – not just McKinsey strategy exercises. 

Revamp Not Enough

He has a chance at an the bank's investor day on November 30, but has already told the «Financial Times» that Credit Suisse will maintain its strategy after 2018. In doing so, Thiam washed away any hope investors may have had for the stock to rerate.

Credit Suisse's response to RBR's also appeared cool: the bank said it is on track with the three-year plan, which it believes will result in substantial payoffs for shareholders.

The example of Bohli shows that some investors expect more from Thiam and from Credit Suisse. A straight-forward turnaround story isn't enough anymore: Thiam has to reinforce his plans and show his hand.