CEO Thomas Gottstein isn't ruling out that Credit Suisse may have been hoodwinked by Greensill over credit insurance on fund assets. He is pledging a «nothing is sacred» review of the Swiss bank's strategy.
«As for me, I feel like a competitive downhill skier dogged with injuries all season, who fought through it and is now in great shape, achieves an excellent racing time in the preliminaries, then ends up tearing a ligament,» Credit Suisse CEO Thomas Gottstein told Swiss outlet «Neue Zuercher Zeitung» (behind paywall, in German) in an interview on Wednesday.
In his 14 months at the helm, the Swiss investment banker has faced Covid-19 and a huge government-backed loan scheme for small business in Switzerland as well as the Greensill fund debacle in its asset management division and a $4.7 billion hit from hedge fund Archegos imploding. The twin crises led to a C-suite shake-up, slashed dividend, and strategy review.
Hoodwinked On Cover?
While Zurich-based Credit Suisse has already parsed the Archegos wreckage for investors, it hasn't disclosed a potential hit from the $10.1 billion line of funds it co-managed with now-insolvent Greensill. Gottstein indicated he believes the Swiss bank was misled by Greensill.
«What we do know is that insurer Tokyo Marine informed Greensill last summer that insurance cover would stop at the end of February. Our head of risk, Lara Warner, wasn't informed about the end of insurance cover until February 22. We had previously asked Greensill and our insurance broker about this. They didn't disclose anything about it to us,» Gottstein said.
Asked whether Credit Suisse would pursue either Greensill or Marsh McLennan, the U.K. supply chain firm's insurance broker, in court, Gottstein said the bank is considering all its options. Spokesmen for Greensill and Marsh McLennan weren't immediately available for response.
«One-Bank» Attachment
The CEO signaled that an executive clear-out over Archegos isn't over yet: the bank will «take the measures necessary – nothing is taboo here». The investment bank's risk will be throttled, including «for sure» in its prime brokerage arm, home to the hedge fund problem.
By contrast, Gottstein still seems wedded to «one-bank» as a strategy, even as he flags a review under incoming Chairman António Horta-Osório under which «nothing is sacred». The one-bank strategy positions Credit Suisse better than it rival banks, Gottstein argued.
«There are many examples where he know the client better because we serve them from two or three sides. As a bank we simply need to know the conflicts of interests and respect internal compliance,» he noted. «When it's done right, we know more about the client's financial strength and actions. But we will look at that in the review: are there negative incentives to make some decisions.»
