Fund manager Thomas Braun wasn't in favor of Credit Suisse CEO Tidjane Thiam's exit, but he tells finews.asia he wouldn't join a shareholder rebellion against Chairman Urs Rohner.
Thomas Braun, what's your view of the events at Credit Suisse in recent months?
It certainly didn't go well for Credit Suisse, though the bank had a problem with the Swiss press for some time. The good thing is that it's clear – not just at Credit Suisse – that methods like these aren't acceptable.
Was replacing the CEO the right measure?
There was no other way to mend the situation. Replacing the CEO was necessary to break free of the situation
«Thomas Gottstein needs to instil a sense of calm»
At a certain point, you can't keep going if you're the subject of as many as five negative articles per week. Credit Suisse couldn't keep going as it had.
Major foreign investors see that differently.
It's a Swiss event – a Zurich one even, but Switzerland does matter. This is where the largest part of Credit Suisse's profits are generated. The board had little choice – it was the right solution for the bank.
What awaits the new CEO?
Thomas Gottstein needs to instil a sense of calm at the bank and rebalance Credit Suisse's relationship with the Swiss press again.
And strategically?
I don't want to give advice. Of course, there are always things an organization can improve, but that's not on my radar.
«I was one of the few people who saw a lot of good in Tidjane Thiam»
What I have noticed is that the bank isn't gaining traction in Asia – that's certainly something we'd want them to look at again. But in principle, there's no need to change tack.
Is Thomas Gottstein the right person for the job?
I think he's the right choice. He has a track record and a good reputation. I never heard anything unfavorable about him.
He apparently got a little testy over the Khan scandal in the Kronenhalle.
These things shouldn't happen, but it's understandable on an emotional level. I think he's a gentlemanly type. A good person, fair. He embodies the right qualities in the current situation.
You don't regret the departure of CEO Tidjane Thiam?
I would have preferred a different outcome. I would have liked to see the scandal buried. I was one of the few people who saw lots of good in Thiam. He is intelligent, has depth and substance, backbone, and his international relationships are impressive.
«Urs Rohner certainly acted regrettably a couple of times»
He also did the right thing for Credit Suisse despite lots of opposition. Spending had to fall. Imagine if that hadn't happened – the bank would now be fighting for survival.
Credit Suisse's biggest shareholder, David Herro of Harris Associates, still wants Chairman Urs Rohner to leave as well. What's your view?
Urs Rohner acted regrettably several times. He replaced (previous CEO) Brady Dougan way too late and bonuses were way too high considering the massive losses. Recruiting Thiam was right, but he should have intervened in questions of culture earlier. I don't know if he did – but Credit Suisse was at the boiling point long before this happened.
So you would support Urs Rohner being voted out?
It's about the bank, which is why David Herro isn't completely correct in his view. The strategy will remain the same – Thiam correctly devised it. Rohner has a year to organize and prepare an orderly, solid transition.
«At 13 Swiss francs, the stock is very cheap»
Deposing him would require another swift solution, which isn't good for the bank. I'd prefer an orderly handover. But I do think Herro will try to vote Rohner out.
Credit Suisse has the right strategy, you said. What are your hopes for the share price?
The ten percent return on tangible equity target isn't just taken out of thin air. At 13 Swiss francs, the stock is extremely cheap. Book value per share without goodwill is roughly 17.50 francs. Sooner or later, the stock has to hit that point.
Thomas Braun is co-founder of investment boutique BWM. Launched in 1997, the firm operates three funds in a value investing approach. Braun's Credit Suisse holding is 3 million shares. He has been a financial analyst and portfolio manager since 1982.
