Credit Suisse board set to back Tidjane Thiam over spying affair

Tidjane's Thiam's apparent personal clash with Iqbal Khan appears to be at the centre of the row. Copyright 2019 The Associated Press. All Rights Reserved

Directors at Credit Suisse are closing ranks around chief executive Tidjane Thiam as the Swiss bank attempts to draw a line under a corporate espionage scandal.

The Zurich-based lender is battling its worst reputational crisis in years after it engaged a private investigator to track its outgoing head of wealth management, Iqbal Khan.

The bank ordered the surveillance because of fears that Mr Khan was preparing to poach bankers and clients to bolster the fortunes of arch rival UBS, where he is due to start in a similar role on Tuesday.

The corporate spying effort descended into farce this month after Mr Khan confronted private investigators who were following him, leading to an angry altercation in downtown Zurich.

The unedifying episode has raised questions over the judgment of Mr Thiam, who had an acrimonious relationship with Mr Khan, in part because of a string of neighbourly disputes concerning residences they each own in Zurich.

Credit Suisse’s board is united in its belief that Mr Thiam should remain as chief executive and that the bank was within its rights to try to ascertain whether Mr Khan planned to pick off its bankers and clients, according to two people briefed on their thinking.

Investor support

One of the people cautioned that the board had not yet digested the final version of an inquiry into the events, which is being led by an external law firm and supervised by John Tiner, a director who chairs the bank’s audit committee. A final decision is expected to be made within the next couple of days.

The person said the report would probably focus on the culpability of executives beneath Mr Thiam and whether Investigo, the private investigation company, had overstepped its remit.

Credit Suisse did not respond to a request for comment.

The board’s determination to back Mr Thiam has been bolstered by the support of some large investors, including Chicago-based Harris Associates. Harris is the company’s largest shareholder, with about 8.1 per cent.

In an interview with the Financial Times, David Herro, deputy chairman of Harris Associates, said he did not think the bank should fire any executives over the incident.

“These are humans; people aren’t flawless,” he said. “They don’t make perfect decisions every time. And this is why, unless laws have been broken, this doesn’t seem like a case for anyone losing their job.”

Mr Herro said that depending on the final conclusions of the inquiry, “perhaps . . . some poor judgment was shown in the way to best protect the stakeholders from a departing executive. I think at this point this is the worst that can be said.”

He added: “The question becomes whether this whole kerfuffle has an impact on the company. Will it impact a counterparty doing business with Credit Suisse? Will it impact a high net worth person turning funds over to Credit Suisse? I think it’s doubtful. Most people outside of [Zurich] don’t really care or have a strong opinion on this.”

Khan expected at UBS

Another prominent shareholder agreed that the episode was “not a resigning matter” for Mr Thiam, although they said they expected the bank’s board to try to close the row down this week and stem the flow of lurid headlines.

Ricky Sandler, chief executive of Eminence Capital, a New York-based asset manager which owns 2 per cent of the bank’s shares, said he continued to “think highly” of Mr Thiam and his team. “Losing the CEO or any other members of senior management because of this would be a very unfortunate outcome,” he said.

Meanwhile, Mr Khan is expected to take up his new job this week as head of UBS’s wealth management business. Some UBS bankers had wondered whether the Swiss group would seek to delay the appointment, after the group’s chairman, Axel Weber, gave an interview in which he said the company was still doing due diligence on its new employee and did not want to make any “regret” hires.

“I fully expect him to be at his desk on Tuesday morning,” said one person familiar with his appointment.

A UBS spokesperson confirmed that Mr Khan would begin work as planned.

Copyright The Financial Times Limited 2019