The Swiss bank’s excruciating litany of sins makes clear how urgently António Horta Osório needs to break with an era where chancers were granted free rein to run roughshod over values and mores.
The Zurich-based bank has had countless watershed moments in recent years: in 2017, its top executives and Chairman Urs Rohner backed down on big paydays rather than go down in Swiss corporate history as the first to be rejected by shareholders on «say on pay».
Seven years ago, when Credit Suisse pleaded guilty in the U.S. to criminal wrongdoing for helping Americans cheat on their taxes, was another. On Rohner’s watch, Credit Suisse shot itself in the foot by delaying looking into misconduct, which in turn tipped U.S. prosecutors to require a guilty plea, a justice official said at the time.
Rohner, a pugnacious trial lawyer with little ability to self-reflect, memorably dodged this by arguing «my vest is clean» after the bank was done for $2.5 billion in the probe.
Next-Level Mistrust
«Spygate» represents a new low: it isn’t that paranoia and malevolence in the C-suite are new (UBS boss Marcel Ospel was famously vindictive towards defecting executives, for example). In recent years, Credit Suisse took workplace mistrust to the next level, thanks to technology like encrypted, erasable chat messages and an especially close-knit squad around ex-CEO Tidjane Thiam.
The three episodes display how Credit Suisse frequently abandoned its ethical compass in fostering cocky entrepreneurialism, free-thinking, and employee ownership of issues. This stance attracted executives and bankers who value their bonus over the value and well-being of the firm – chancers who run roughshod over cultural mores.
Conduct Code In Tatters
In refusing to adequately police corporate behavior, Credit Suisse embraced them. The repeated scandals expose a code the conduct that all bank employees must sign – and the overwhelming majority of whom also observe – as a sham.
The most recent scandal are some of the most serious and troubling: The damage done to Mozambique’s economy is untold, but the total of $678 million in fines, restitution, and profits that Credit Suisse is relinquishing probably doesn’t cover it.
Colonial Overtones
There are also uncomfortable overtones in the bond deals with Mozambique, which didn’t win independence from colonial master Portugal until 1974. Why did Credit Suisse view the corruption-addled eastern African coastal nation – whose entire economy is worth $15 billion according to World Bank data – as a good prospect? Why an Abu Dhabi shipbuilder as a middleman?
Marisa Drew and Mark Echlin – then co-heads of investment banking and capital markets in Europe, the Middle East, and Africa when all this went down – both remain with Credit Suisse as managing directors. Drew is even the linchpin of its sustainability efforts and previously reported directly to the bank's CEO.
Gambling Doesn't Pay
Former co-CEO John Mack admitted in 2003 the bank had been a «giant casino», valuing speculative bets and bonuses over long-term profits, before he arrived. It is now a moral gaming house, with values and beliefs malleable to the conditions required.
Unfortunately, instead of the house always winning, Credit Suisse has all too frequently lost money, standing, and reputation. Culturally, Credit Suisse’s much-vaunted Swiss roots – entwined with the infrastructure development of Switzerland in the 19th century – have repeatedly clashed with its capital market ambitions.
Jesuit Influence
Four months ago, I wished Sir Tónio good luck taming the Swiss bank’s still-strong First Boston DNA. This was only half of the equation: Horta Osório’s primary challenge is to ensure a healthier culture permeates every pore of its risk management as well as its strategy.
The Portuguese native has cited his Jesuit schooling in Lisbon for imbuing him with a «moral obligation» to serve others. Can he make it part of Credit Suisse’s culture?
