Farewell, CS CEO Thiam was able to shine again with good figures. But appearances are deceptive.
The last appearance of the outgoing CS boss Tidjane Thiam in Zurich today. It posted a net profit of CHF 3.4 billion – an increase of 69 percent over the previous year. “When I came to Credit Suisse in 2015, we launched a far-reaching three-year restructuring program to create sustainable value for shareholders. Our goal was to expand our unique wealth management business to take advantage of the long-term growth in global wealth, ”said Thiam.
Did he achieve his goals? Which construction sites does he leave behind to his successor Thomas Gottstein?
Earnings: Tidjane Thiam says goodbye with a strong jump in profits. Real estate sales and an increase in the value of the stake in the exchange operator Six also helped. At 77.6 percent, the cost / income ratio at CS has been the best since 2010. Capital-intensive and volatile investment banking has been scaled back in recent years, and asset management activities have been boosted. Nevertheless: Thiam wanted to double the pre-tax profit in Asia. That didn’t work. Pre-tax profit reached CHF 902 million last year, roughly the same level as when Thiam took office.
Share price: When Tidjane Thiam took over the management of CS, the share stood at CHF 25. Then it went down rapidly. After a year in office, the price reached the low point in the Thiam era at around CHF 9.40. There was an interim increase to over CHF 18 before it went down markedly again. The price is currently quoted at CHF 13.30. Down, up, down – the CS cannot be satisfied with the share price, which the top of the bank always showed. UBS performed better in the same period. In short: there is a lot of room for improvement.
Capital buffers: Credit Suisse is now significantly more capitalized than when Thiam took office. And can absorb losses better. With 12.7 percent, the bank was able to slightly improve its core Tier 1 ratio in 2019 compared to the previous year (12.6 percent). But UBS is even better off, with a rate of 13.7 percent. This starting point is comfortable for Thiam’s successor Thomas Gottstein. However, this capitalization hardly allows large growth leaps through takeovers.
Culture: Here Tidjane Thiam leaves a large construction site. The affair surrounding the surveillance in the carpet floor has battered the big bank and its public image over the past few months. The leadership style of Thiam and his team has also created internal disruption, uncertainty and frustration among employees. The new management must now bring peace and trust to the store as quickly as possible. At the same time, the top of the bank has to ease the tensions with the major shareholders who have stood behind Tidjane Thiam in the course of the whole argument.
Daily news at noon, February 13, 2020