Credit Suisse will feel the pinch after its influential CEO Tidjane Thiam steps down over a scandal that erupted under his watch. Thomas Gottstein has been chosen to replace Thiam. Image Credit: AP

Zurich (Bloomberg): Credit Suisse Group AG CEO Tidjane Thiam is resigning in a shock move likely to fuel an uproar among key shareholders who had backed the CEO amid a damaging spying scandal. Thiam will step down after presenting the Zurich-based bank’s fourth-quarter and full-year results next week.

He will be replaced by Thomas Gottstein, a 20-year veteran of the bank who leads the Swiss unit. The bank also said Chairman Urs Rohner has the board’s “unanimous” backing to complete his term until April 2021.

The decision is the culmination of a conflict between the CEO and Rohner that escalated after a recent spying scandal dented the bank’s reputation and prompted difficult questions about the culture at the top of the firm. While Thiam was cleared in an internal probe and a close lieutenant of his took the fall, the bank has struggled to move beyond the scandal after more cases surfaced.

Top shareholders had warned the board of directors ahead of this week’s meeting that they shouldn’t take action against the CEO. Instead, they urged Rohner to back Thiam or step down himself, in an unusual public display of support for the CEO.

“Tidjane has made an enormous contribution to Credit Suisse since he joined us in 2015. It is to his credit that Credit Suisse is standing on a very solid foundation and has returned successfully to profit,” Rohner said in the statement.

For Thiam, who was born in Africa and previously held top roles at Aviva Plc and Prudential Plc, the departure blemishes a largely successful four years at Credit Suisse, which he pivoted away from volatile trading and toward the more stable business of catering to affluent clients. While the shares lost about half of their value during his tenure, he won shareholder support for stabilizing the franchise by scaling back trading and bolstering wealth management.

The Credit Suisse spying scandal
The troubles started in September when it emerged that the bank spied on its star banker Iqbal Khan after he announced he was joining crosstown rival UBS Group AG. The details that emerged in the wake of the scandal, including a personal falling-out between the two executives earlier that year and the suicide of a contractor, rattled business circles in Zurich, which normally enjoys a reputation for quiet professionalism.
An internal probe by Credit Suisse concluded Tidjane Thiam didn’t know about the spying, and that Chief Operating Officer Pierre-Olivier Bouee was responsible. Bouee was fired late last year.
It soon emerged that human resources chief Peter Goerke was also followed, which the bank also blamed on Bouee.