Why does Credit Suisse want Thiam?

Prudential boss Tidjane Thiam is set to replace Brady Dougan as Credit Suisse CEO.

by Adam Gale
Last Updated: 04 Feb 2016

Prudential boss Tidjane Thiam must like a challenge. After eight years at the Pru and thirteen in the insurance business, he’s going to try his hand at banking. Credit Suisse has announced that Thiam will become its new CEO in the summer, replacing American Brady Dougan. He will be the second black boss at a major bank, after Stanley O'Neal at Merril Lynch in the 2000s.

It’s not surprising in many respects that Credit Suisse wants him. Thiam has presided over something of a golden age at the Pru, since taking the helm in 2009. Its share price increased 800% from lows in March 2009, as Thiam led expansion into developing markets.

Despite the impact of persistently low interest rates in the West, regulatory changes on UK annuities and currency headwinds in Asia (those pesky headwinds again), Prudential’s still going strong. This morning it announced a 14% rise in full-year operating profit to £3.2bn for 2014, following a 17% rise last year and a 25% rise the year before.

Asia has been at the heart of Thiam’s strategy, and it’s possible that Credit Suisse wants to tap his considerable expertise there. ‘His extensive international experience, including in wealth and asset management and in the successful development of new markets, provides a firm foundation for leading Credit Suisse,’ said the bank’s chairman Urs Rohner.

Few would deny that Thiam is a valuable and proven leader, but his appointment at a major bank will cause surprise. After all, he’s never actually worked in the sector – Thiam was a management consultant and Ivory Coast civil servant before going into insurance.

Indeed, his early tenure at Prudential was blighted by a botched takeover of Asian insurer AIA, which many attributed to his inexperience in acquisitions. The FSA (now FCA) fined the Pru £30m and personally censured Thiam for failing to keep them informed about the deal, but shareholders gave him another chance. They’ll be glad they did.

Perhaps that’s the point. Thiam is not an experienced banker, but that means he’s untarnished with the scandals that have stained the sector in recent years. In a sense, Credit Suisse is buying into his reputation for integrity.

The bank’s outgoing boss Brady Dougan won plaudits for his handling on the financial crisis, but has faced mounting calls to leave since the bank paid out $2.6bn (£1.7bn) after it pleaded guilty to aiding US tax evasion in 2013.  He’s also been criticised for failing to reform the bank’s investment division as quickly as rivals have.

Anyone coming from within the world of banking – Dougan has been at Credit Suisse for 25 years – will fairly or unfairly be associated with the industry as it was, whereas Thiam has a clean slate.

Speaking about his exit, Thiam said his job was not to stay as long as possible. ‘It is to do the job for a period of time and leave the company in a better position than the one you receive.’ Credit Suisse shareholders certainly seem to hope so. Shares at the bank rose 7.5% on the news to 25 Swiss Francs, while those at Prudential fell 2.5% to £16.22.

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