Dougan says no plan to quit Credit Suisse after fine

Zurich

Credit Suisse’s chief executive and chairman sought to put a three-year battle with US authorities behind them on Tuesday, by insisting they had no plans to resign after the Swiss bank pleaded guilty to helping American citizens evade taxes.

Other Swiss banks under investigation by American authorities for tax evasion allegations, such as Julius Baer, are now likely to push ahead with settlements of their own.

“We think that a solution for the other banks can be found within the next few months,” Eveline Widmer Schlumpf, Switzerland’s finance minister, told a press conference in Bern.

The move also opens the way for France’s BNP Paribas to agree a settlement with US authorities over alleged sanction violations, which is expected to include a guilty plea, fines of at least $3.5bn, and a suspension of its ability to clear US dollar transactions.

On Tuesday, Credit Suisse investors sent shares in the Swiss bank up almost 1 per cent to SFr26.30 in Zurich. This mildly positive reaction may now embolden prosecutors, who have said “coordination” with regulators in reaching a deal was imperative to the outcome. “I am really confident that this robust cooperation will serve us well in the weeks and months ahead,” said Eric Holder, the US attorney-general, on Monday.

But some investors and analysts said that the Credit Suisse settlement — under which it agreed to pay fines of $2.6bn — left big questions remaining over the bank’s short-term capital position and its longer term leadership under Brady Dougan and Urs Rohner.

With a common equity tier one ratio — a key measure of financial strength — of 9.3 per cent after the settlement, Credit Suisse has the weakest balance sheet of its major peers — far below its main rival UBS at 13.2 per cent.

On Tuesday, Credit Suisse said it planned to sell assets, including property, to rebuild this ratio to 10 per cent by the end of the year, but some analysts said it would still face pressure to raise capital.

James Chappell, banking analyst at Berenberg, said: “We’ve had a view for a long time that there is a SFr10bn capital shortfall in the business and the model is too dependent on leverage.”

One top 20 shareholder added that the bank’s top management had another year to prove it was able to deliver on its targets. “The satisfaction with management is not great,” the investor said. “Many would have liked to see Brady go but we think if he delivers in a year’s time he will be able to stay.”

The future of Credit Suisse’s top executives has become the subject of speculation in recent weeks, as the likelihood of a guilty plea in the US — the first such step by a global bank in two decades — emerged.

After details of Credit Suisse’s settlement were announced, some Swiss politicians continued to call for the ousting of Mr Dougan as chief executive and of Urs Rohner as chairman.

“It’s incomprehensible that even today Credit Suisse’s most senior officials haven’t stood down to give a clear signal that the bank is starting afresh,” the he Swiss Social Democrat party said. “It is also incomprehensible that the regulators haven’t demanded this.”

However, on a call with journalists and analysts, Mr Dougan said that he had no plans to step down. “My focus has been on working and resolving the issue and taking the business forward, so no, that’s never been a consideration,” he said.

Mr Rohner took a similar line, telling Swiss national radio that neither he nor Mr Dougan had behaved wrongly.

“Personally, our hands are clean,” he said. “Whether the bank’s hands have been clean over the years is another question. It is the case that Swiss banks, including Credit Suisse, took on untaxed money ... We are disappointed, and regret this greatly.”

Credit Suisse’s upper echelons also received a boost from Finma, the Swiss financial regulator. Although it said that the bank had violated its duty to “identify, limit and monitor the risks involved in the US client business”, Finma said that it “did not find indications that Credit Suisse’s senior management had known of specific misconduct”.

— Financial Times