By Brenna Hughes Neghaiwi and Oliver Hirt
ZURICH, April 29 (Reuters) - Antonio Horta-Osorio will need
to draw deeply on the lessons he learned in turning around
British bank Lloyds when he joins Credit Suisse
as its new chairman on Friday.
As one of Europe's longest-serving bank CEOs, he has
received plaudits for bringing Lloyds back from the brink in
2011, when in an interview this month he said it was "about to
die" after having to be bailed out during the financial crisis.
At Credit Suisse another one of banking's toughest jobs
awaits "AHO", as the 57-year-old was known at Lloyds, dealing
with damage from both the implosion of U.S. investment firm
Archegos and the ramifications of the insolvency of British
supply chain finance firm Greensill.
Combined, these have triggered multi-billion dollar losses,
sackings and bonus cuts at Credit Suisse, just as other banks
are riding bumper trading and dealmaking profits.
While Switzerland's second-largest bank is investigating
what went wrong, its chief executive Thomas Gottstein has
flagged a deeper review of the bank once Horta-Osorio arrives.
"At Lloyds he was quite efficient in reorganizing. He sold
non-core and toxic assets relatively successfully, cut costs to
the core and restored the bank to profitability and full private
ownership," said Guy de Blonay, a fund manager at Jupiter.
PARALLEL LIVES
The Portuguese banker's Lloyds tenure spans the same decade
as the outgoing Credit Suisse chairman, but Urs Rohner's time
has been marked by upheaval and doubts over the Swiss bank's
long-term direction.
A lawyer by training, and CEO of German television and radio
broadcaster ProSieben before joining Credit Suisse as
general counsel in 2004, Rohner faced fierce criticism as it
endured a series of losses and scandals in the last five years.
While Lloyds shares have fallen around 25% under
Horta-Osorio, Credit Suisse's stock has lost nearly
three-quarters of its value under Rohner.
With the appointment of Tidjane Thiam as CEO in 2015, Rohner
had set his sights on de-risking the bank and making wealth
management its focus, two sources familiar with the matter said.
Yet despite the turnaround kickstarted by Thiam, who left
last year after a clash with Rohner over a spying scandal,
Credit Suisse remains exposed to risky trades and relationships.
It lost over $5 billion related to prime brokerage client
Archegos and faces further fallout from more than $10 billion in
Greensill-related funds.
Including the Archegos charge, writedowns and penalties paid
by Credit Suisse since late 2015 total more than $15 billion,
while it is facing at least three enforcement proceedings by
Swiss financial market supervisor FINMA.
Rohner has largely steered clear of the spotlight following
the bank's most recent run of problems. But he and Horta-Osorio
have been in contact in recent months, one source familiar with
the matter said, in order to secure a smooth handover.
Credit Suisse declined comment.
EXHAUSTION
Horta-Osorio focused on expanding relatively sedate retail
banking, insurance and wealth management businesses at Lloyds
and during his final results call on Wednesday, said returning
it to private ownership in 2017 was the highlight of his tenure.
"More important than that was the journey along the way ...
achieving the purpose of helping the real economy of the UK to
the extent we could," he said during a media call.
However Horta-Osorio has not had an easy ride, facing
scrutiny over his high pay relative to other British bank
bosses, his handling of a historic fraud case and an
industry-wide payment insurance mis-selling scandal that
ultimately cost Lloyds 22 billion pounds and took years to
resolve.
And he has talked publicly about struggles with stress and
insomnia as Lloyds was roiled by the 2011 eurozone crisis.
"That led me to a period of exhaustion as you know where I
had to take a few weeks out and then came back. Those were very
bad days," Horta-Osorio said this week.
Analysts say his experience working through misconduct
issues should prove helpful as he enters Credit Suisse at a
moment of risk management crisis.
"He is known for very strong attention to detail and drive
and we assume that risk management will be at the top of his
agenda," Maria Rivas, Senior Vice President of Global Financial
Institutions at DBRS Morningstar, said.
(Reporting by Brenna Hughes Neghaiwi and Oliver Hirt in Zurich;
Additional reporting by Iain Withers in London and Matt Scuffham
in New York; Editing by Alexander Smith)
Lloyds (LLOY)