Harris Associates lifted its shareholding in Credit Suisse, but the major U.S. investor told finews.asia it is still stumped why the bank's stock is languishing.
Credit Suisse boss Tidjane Thiam has always enjoyed the backing of fund manager David Herro of U.S.-based Harris Associates for his extensive restructuring of the Swiss bank: for radical spending and job cuts, pruning its investment bank, or two cash calls for a total of 10 billion Swiss francs ($10 billion).
Herro and Harris also supported Thiam and Chairman Urs Rohner during a torrid shareholder battle over pay and bonuses two years ago. The only step which Herro couldn't countenance was a partial stock listing for its Swiss unit nearly two years ago – preferring the second cap hike instead.
Raised Stake
A traditional investor, Harris has suffered a 50 percent drop in Credit Suisse's stock since Thiam took over in 2015. Last year was an «annus horribilis» for the Swiss bank's investors, with a more than one-third drop in value despite the bank's concluding the revamp.
Herro told finews.asia that Harris will stick with Credit Suisse: «We have actually increased our investment to just above 9 percent as a result of the company continuing to strongly execute on its plan», he said. This makes the Natixis-owned fund manager Credit Suisse's largest shareholder, via its Oakmark funds.
Bank's Pep Talk
The big shareholder is still somewhat stumped on why other investors aren't buying the Credit Suisse recovery story. «Not sure», he said, «but investors are painting all European financials with the same brush- ignoring the massive improvement in Credit Suisse’'s operating performance in particular».
For its part, Credit Suisse believes «our shareholders should begin to see the benefits of the restructuring – both through the anticipated return of capital and aimed increase
in tangible book value per share as capital generation strengthens» in 2019, it said in an annual letter to shareholders, released earlier this month.
Little Advice For Thiam
Thus far this year, Credit Suisse outperformed the sector – only to let those gains slip since then. Herro has little advice for Thiam and his 11-person management following the three-year revamp, expecting «continued execution of better business performance in a more cost efficient manner», he said.
