The new face of Credit Suisse: wealth management, rather than investment banking.
Photograph by Simon Dawson — Bloomberg via Getty Images
By Geoffrey Smith
March 10, 2015

Credit Suisse AG (CS) has hired Tidjiane Thiam, head of the U.K.’s biggest insurer Prudential Plc (PUK) to succeed Brady Dougan as chief executive, the bank said Tuesday.

The announcement, which draws a line under Dougan’s often-controversial eight-year solo rule at the Swiss giant, sent the bank’s shares sharply higher, leaping 7.5% in early trading Tuesday.

That reaction is likely as much to do with the identity of Thiam as it is with Dougan. Born in Cote d’Ivoire and the first black man ever to run a company in the U.K.’s benchmark FTSE-30 index, Thiam’s six-year reign at Prudential has been overwhelmingly successful. In the six years since Thiam moved from the chief financial officer’s seat to the CEO’s, Prudential’s shares have risen by over 400%, while Credit Suisse’s have fallen 32%.

Dougan has, by common consent, struggled to bring CS into line with the post-crisis environment, loath to rein in a free-wheeling investment bank that had been the engine of group profits until 2008. A lack of control in the boom times has come back to haunt the bank in recent years.

Last year alone, it became the the first foreign bank in over 10 years to plead guilty to a crime in a U.S. court when it admitted helping U.S. citizens to evade taxes, paying a $2.6 billion fine as a result. It also got hit by a $10 billion lawsuit in relation to alleged fraud in the sales of U.S. mortgages before 2008. And, almost inevitably, it was on the long list of those banks that manipulated benchmark interest rates before and during the crisis.

Thiam’s profile–a wealth of experience in asset management but none in banking per se–would appear to suggest a bigger change in focus for CS than Dougan has been able to achieve.

In the City of London, Thiam is seen as a man with a clear strategic vision and the ability to implement it. The French-educated CEO has been rewarded handsomely for staking Prudential’s future on growth in Asia, a region which CS has had less success in cracking.

Admittedly, his first attempt to break into Asia was something of a fiasco–a failed $35.5 billion bid for AIA, the Asian arm of AIG, which collapsed under the weight of shareholder opposition and also led to the company being fined 30 million pounds ($45 million) in 2013 for failing to keep the regulators up to date with his plans.

(To rub salt in the wounds, AIA is now team sponsor for Tottenham Hotspur, the north London soccer rivals of Thiam’s favorite team, Arsenal.)

However, Prudential’s in-house Asian life and asset management business has grown strongly since. Last year, it accounted for 45% of the group’s post-tax operating profit.

(Prudential Plc has no connection to the U.S. insurer Prudential Financial Inc (PRU). It trades in the U.S. through Jackson National Life.)

 

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