Credit Suisse Needs Horta-Osorio’s Reforms Despite His Failings

By Paul J. Davies | Bloomberg,

At first glance, it seems like a rare, refreshing moment of high principle in public life: Antonio Horta-Osorio, having twice broken Covid-related rules, resigns as chairman of Credit Suisse Group AG.

But it’s not that simple. In reality, Horta-Osorio believed his sincere apologies for unintentional breaches of the rules, along with potentially some kind of rap on the knuckles from his board, should have put an end to the matter, according to a person close to Horta-Osorio, among several sources I spoke to for this column who asked not to be named because they were not authorized to speak about him. In reality, the person said, it was a lack of support from some fellow board members that led him to quit. In his statement, Horta-Osorio simply said that his personal actions had “compromised [his] ability to represent the bank internally and externally.” 

For Credit Suisse, this is another distraction it doesn’t need after a string of unforced errors, to use a tennis analogy that is timely, not just for the recent missteps of Novak Djokovic, but for Horta-Osorio who is a keen player and fan of the sport.

To recap: Since the Swiss bank’s previous chief executive officer, Tidjane Thiam, was forced out over an outrageous spying scandal, Credit Suisse has lost $5.5 billion in the blow-up of the Archegos family office-slash-hedge fund even as many rivals managed to take much smaller hits from the same disaster. Credit Suisse also lost an as-yet-undetermined amount of client money in the collapse of supply-chain-finance company Greensill Capital.

These problems, or at least the operating culture that caused them, predated Horta-Osorio. His job as chairman became one of cleaning up the mess and setting the bank on a steady path with robust risk management.

Horta-Osorio was suited to this job.  He is a risk-obsessed, turnaround specialist — as he proved in wrenching Britain’s Lloyds Banking Group back from its near death after the 2008 crisis. Leadership through business-as-usual problems, however, is a weakness, according to people who worked with him at Lloyds.

He is a hard task master who always wants to be the best informed and smartest person in the room. He likes things to proceed apace and will move people out of positions quickly if they aren’t performing, according to a former colleague.

This was the style he also brought to Credit Suisse, which some appreciated. Switzerland has an unusual corporate set-up compared with Anglo-Saxon markets. The chairman is directly responsible for strategy in an executive fashion, while the CEO (currently Thomas Gottstein at Credit Suisse) is responsible for implementation and daily operations. Horta-Osorio fully leaned into the executive element of the chairman’s role, demanding more updates and information than Thiam, according to a senior colleague who welcomed this approach.

It is apparent, however, that others weren’t so comfortable: Horta-Osorio’s breaching of Covid rules came out because someone at the bank leaked the stories. The flip side of Horta-Osorio’s style is that some find him a control freak who isn’t collaborative and is keen to apportion blame to individuals when things don’t work, according to a person who worked with him at Lloyds.

At Credit Suisse, Horta-Osorio had set an explicit demand for a new culture of personal responsibility and accountability, which was meant to ensure there would be no more of the misjudgments that led to the Archegos and Greensill losses. Such a policy should have been enough to prompt Horta-Osorio’s resignation once it was clear he had broken the rules. It is a measure of the cynicism in public life that few expected he would do so — until the board forced it upon him.

For Credit Suisse, there is some uncertainty ahead. The new strategy unveiled at the start of November got a mixed reception from investors and, at the end of last week, the shares were still down 3.6% from the level before it was announced. The stock fell another 1.5% on Monday.

The new chairman, Axel Lehmann, will stick to the strategy for now. He joined the board only last October and is chair of the risk committee, which was his background at cross-town rival, UBS Group AG. He may be quieter in the role of chairman: He is Swiss and analysts at Citigroup Inc. expect him to have less day-to-day involvement in running the bank, in sharp contrast to Horta-Osorio.

There is no doubt that Credit Suisse needed a firm hand to shake things up after the previous woeful era. There is also no doubt that Horta-Osorio provided a real shock to the system that some found too much.

Investors will question whether his departure signals that the appetite for change at Credit Suisse isn’t as great as it should be. The new chairman should demonstrate quickly that he aims to keep up the pressure and make sure that the cultural change — to which the whole board agreed — will still takes place.

More From Other Writers at Bloomberg Opinion:

Bad News, London and New York: Finance Hubs Are Becoming Obsolete: Paul J. Davies

The U.K. Should Let Inflation Rip for a Bit: Marcus Ashworth & Mark Gilbert

Archegos’ $20 Billion Margin Call Means More Hedge Fund Pain Ahead: Shuli Ren

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Paul J. Davies is a Bloomberg Opinion columnist covering banking and finance. He previously worked for the Wall Street Journal and the Financial Times.

More stories like this are available on

©2022 Bloomberg L.P.


Hippo Sighting Report

Help us out, we really appreciate it.

Help contribute to our research, and let us know if you have seen similar situations that we may have missed. Our team will review the details you provide and add to our main list once we verify the information.

stay informed

Subscribe and get the updated Hippo List.

Get notified when we release our updated lists by email.

Make a Donation

Thank you for subscribing!

We will send you an email to confirm your details.  Welcome aboard!

Thanks for sending us your report.

We will review your information, and publish in on our list once we validate the details.