Credit Suisse Poaches Prudential's Thiam For Asia Push
Credit Suisse has swooped on Prudential boss Tidjane Thiam to replace chief executive Brady Dougan – seen to have failed in reforming the Swiss bank fast enough – in order to push into wealth management of a growing multi-millionaires club in Asia.
Thiam, 52, has driven Prudential's expansion into the same region since 2009 and its success in selling insurance products there has trebled the firm's share price. Although the former Ivory Coast government minister has never run a bank, his experience of dealing with financial regulators is also seen by shareholders and analysts as an advantage given the raft of new rules that have been introduced post-financial crisis.
Dougan, 55, had been criticized for not paring back Credit Suisse's (CSGN.VX) investment bank enough after the introduction of global regulation that forced banks to hold more capital in the event of future problems ate into the business's returns.
The American is leaving after 25 years at the bank and eight as CEO, when he was one of the world's highest-paid bankers with his salary topping 90 million Swiss francs ($91 million) in one year. More recently, he had embarked on several rounds of cost-cutting.
“Thiam has no banking experience but it could be that an outsider can make some of the decisions they were not able to make internally,” said one investor in Credit Suisse, who asked not to be named because she was not authorized to speak to the press.
Credit Suisse Chairman Urs Rohner said Dougan was stepping down at the end of June and would be replaced by Thiam, who became the first black CEO of a FTSE 100 company when he moved to the top job at Prudential from insurer Aviva (AV.L).
Originally from Ivory Coast, Thiam left in his early 30s after a coup there and joined consulting firm McKinsey & Co in Paris – making him now the third ex-McKinsey member on Credit Suisse's 10-person executive board. People who have worked with him said he has a sharp intellect and deals well with regulators and colleagues.
Investors pushed Credit Suisse shares up 7 percent by midday. Though Thiam failed in his attempt to take over Asia-focused insurer AIA (1299.HK) in 2010 after a shareholder rebellion, he is still seen as having brought value to Prudential by focusing on Asia as a key profit driver.
That also spurred an expectation that he will cut the investment bank hard, finally. Credit Suisse's European rivals like UBS (UBSG.VX) have been faster to shrink this part of their business and focus instead on other areas of strength.
“Thiam's background in insurance and asset management suggests Credit Suisse's focus is moving increasingly away from investment banking,” said a UK-based fund manager, who declined to be identified because he was not authorized to speak to the press. The fund manager was reviewing his position after selling the bank's shares on concerns about capital requirements.
Rohner said Thiam's international experience, particularly in wealth and asset management and developing new markets, laid the foundation for his appointment, which was reported overnight by various news outlets including Reuters.
“With Tidjane Thiam, a strong and distinguished leader with an impressive track record in the global financial services industry will take the helm of our bank,” Rohner said.
FRESH PAIR OF EYES
Credit Suisse has battled several problems under Dougan, who also faced calls to quit last year when the bank reached a $2.5 billion settlement with U.S. authorities for helping Americans evade taxes via secret bank accounts.
The bank's board backed him over that deal – under which Credit Suisse pleaded guilty to criminal charges but kept its New York license and its legally protected client data – but he was criticized by some politicians and media in Switzerland.
The Illinois native was also criticized for sticking with an investment banking strategy when regulators and politicians viewed that business as too risky and Swiss regulators imposed tougher capital rules on their banks than other countries.
Dougan, whose departure leaves JP Morgan's (JPM.N) Jamie Dimon and Goldman Sachs' (GS.N) Lloyd Blankfein as the only two global CEOs still in place since the financial crisis, said on Tuesday he had “tremendous respect” for his replacement.
Sally Yim, vice president at Moody's Investors Service, said before Thiam's appointment was confirmed that Credit Suisse needed someone with “with a diverse background (who) could look at its strategy with a fresh pair of eyes.”
Unlike Dougan, Thiam speaks French, which will help to build bridges with Swiss politicians wary of bankers after having to bail them out during the financial crisis.
“Now (Swiss President Simonetta) Sommaruga has somebody she can speak with in a national language,” said one former Credit Suisse banker, speaking on condition of anonymity.
Thiam is also at home with the world of politics – he says he once turned down an offer to be prime minister of his native Ivory Coast. Jean-Marie Kouassi Ahoussou, senior editor of Ivorian newspaper L'Inter, who worked with Thiam when he was a politician, told Reuters he “didn't rest on his laurels”.
Credit Suisse is unlikely to have been the only organization to have courted Thiam while he has been at Prudential, which declined to comment on a report that he had previously been approached to join the World Bank.
However, in many respects, Thiam is not a typical financial industry CEO.
A fan of English football club Arsenal, he also lists 'The Brothers Karamazov' by Fyodor Dostoyevsky as his favorite book and his top song is Tadieu Bone by Ismael Lo, a guitarist from Senegal, his father's country.
He chose tracks by Stevie Wonder and Frank Sinatra when he appeared two years ago on BBC Radio's Desert Island Discs – a popular program where guests imagine themselves as castaways with only a few choices of music and a single luxury. His was a solar powered ice cream maker.
Asked on that show how he felt leading people, Thiam said: “It's a bit like walking a tightrope because you feel all these expectations around you and it's rarely comfortable. If you really believe in what it is you are trying to achieve it helps you go through a journey and walk without looking down.”
Prudential, Britain's largest insurer by market value, confirmed Thiam's departure as it reported a 14 percent rise in operating profit in 2014.
The firm said a successor has been identified and would be announced after the regulatory approval process. Thiam is expected to remain in place until after first quarter results are released in May. The insurance group declined to comment on media reports that its U.S. business head Mike Wells would get the job.
Prudential shares fell 1.9 percent.