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Credit Suisse CEO 'never considered resigning' over Khan spying scandal


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Credit Suisse CEO 'never considered resigning' over Khan spying scandal

CEO Tidjane Thiam never considered leaving Credit Suisse Group AG following the scandal involving spying on the bank's former wealth management chief Iqbal Khan, Thiam told journalists Oct. 30.

The bank also said it remains cautious in its near-term outlook because of global trade tensions, among other things.

Khan, who joined Credit Suisse's domestic rival UBS Group AG as head of wealth management at the start of October, was followed by a firm hired by former Credit Suisse COO Pierre-Olivier Bouée, who stepped down shortly after the affair was uncovered.

Surveillance of this kind does not happen often in the industry, Thiam said at a third-quarter earnings presentation. Banks can monitor the work of their traders but they do not follow them, he said.

No prior knowledge

An internal investigation at Credit Suisse found no evidence that Khan had been trying to poach clients or colleagues to move with him to UBS. The probe cleared CEO Thiam and found Bouée was solely responsible for the decision to spy on Khan.

Thiam said he had no prior knowledge of Bouée's decision and that he had a professional rather than a personal relationship with the former COO. Bouée and Thiam previously worked together at consulting group McKinsey and insurance companies Aviva and Prudential before making a joint move to Credit Suisse in 2015.

"I'm not sure you can describe [Bouée] as a friend," Thiam told journalists, noting that during the three and a half years at Credit Suisse they might have had dinner once.

"This is not how I describe my friends," Thiam said, adding that he never confuses his personal and professional relationships.

Credit Suisse suffered some reputational damage from the affair but has not lost business as a result, Thiam said. It held long conversations with some important clients in Switzerland which did not result in the clients leaving.

"We answered the questions that they had and there was no impact," Thiam said.

Cautious for near term outlook

Despite a strong set of third-quarter results, Credit Suisse remains cautious in its outlook for the next three years. Speaking to analysts earlier in the day, Thiam said there was limited visibility into 2021 and beyond, given the ongoing uncertainty related to global trade and geopolitical issues.

"We are cautious [because] everybody you meet is cautious," Thiam said, adding that clients are worried about the ongoing U.S.-China trade dispute and tensions in the Middle East. The upcoming U.S. election is also a big factor for 2020, he said.

This has an impact on mergers and acquisitions, especially large deals, the CEO said.

"Chinese M&A has stopped, basically, for understandable reasons," he added.

Subdued client activity from completed M&A transactions and initial public offering issuances over the third quarter, drove a 20% year-over-year decline in net revenues across the group's advisory and underwriting businesses to CHF425 million.

Volatility and macroeconomic uncertainty were the main reasons for investor cautiousness.

"Advisory and other fees decreased 27%, driven by significantly lower revenues from completed M&A transactions," the bank said in its third-quarter financial report.

Nevertheless, the overall performance of the group's investment banking and capital markets business was strong, thanks to a 75% year-over-year surge in fixed-income sales and trading revenues and a 13% rise in equities trading revenues.

The group saw solid results across business units as the prior three-years of restructuring are bearing fruit. Credit Suisse nearly doubled its net income attributable to shareholders for the quarter, to CHF881 million from CHF424 million a year ago. Revenues grew to CHF5.33 billion in the period, from the prior year's CHF4.89 billion.

Nevertheless, the bank's share price lost value following the earnings statement, trading down by 3.15% at CHF12.31 as of 12:56 CET.