Katharina Bart Zurich
CREDIT Suisse boss Brady Dougan has outmanoeuvred an internal rival with his recent revamp of the Swiss bank and management shake-up but is still on borrowed time, according to senior banking sources.
Dougan might have played his last hand with an overhaul that strengthens the investment bank, where the American made his career before taking over as chief executive in 2007, while also promoting two more executives to join the race to succeed him.
“The latest reorganisation shows clearly that Dougan remains under immense pressure,” a former high-ranking Credit Suisse banker said. “He will be replaced as soon as a suitable successor is found.”
The Credit Suisse reorganisation contrasts with rival UBS, which is abandoning most fixed-income activities in favour of its flagship private bank as tough Swiss capital rules begin eating into investment banking profits.
Instead, Dougan, who has long defended the unit he used to head from calls for dramatic cutbacks, announced a raft of measures that confirm his desire to keep Credit Suisse at the top table of investment banking.
In an affirmation of his commitment to the fixed income business that UBS is shrinking, Dougan promoted French debt banker Gael de Boissard as investment bank co-head alongside American Eric Varvel, who will also run the Asia-Pacific region.
The asset management business will be integrated into the private banking unit and its American head, Robert Shafir, will be appointed co-head alongside private banking boss Hans-Ulrich Meister.
Meister originally pushed for the asset management integration to strengthen his own unit, but Dougan outfoxed him by stalling the move and making his ally Shafir the joint head, according to several sources close to the bank.
The private bank, which caters to the financial needs of the wealthy, had engineered a merger of the Swiss retail and private banking arms to cut costs but was the “net loser” of the shake-up, sources said.
“They have been relegated to a supporting role and Meister has effectively been demoted” by having to accept a co-head for the unit he ran alone, a former senior Credit Suisse executive said.
The one Swiss banker among the four division heads, Meister had made no secret within Credit Suisse of his ambitions for Dougan’s job.
Dougan won praise for steering Credit Suisse through the financial crisis without resorting to a government bailout like UBS but has been criticised for squandering that advantage, drawing an unusual call from the Swiss central bank earlier this year to urgently bolster capital.
He has also drawn fire in Switzerland for spending much of his time in New York and failing to learn German. However, he cemented his position when he marshalled support from key shareholders for a package of measures to boost capital by Sf15.3 billion (R147bn) in response to the central bank rebuke.
JPMorgan Chase analyst Kian Abouhossein said 2013 was a “make or break” year for Dougan, in which the chief executive must cut costs and scale back capital-intensive areas of fixed income such as foreign exchange and commodities.
While Dougan had bought some time with the revamp, his future was still uncertain despite recent public backing by chairman Urs Rohner, sources close to the bank said.
Rohner had been more critical in private, sources said. “Rohner would have replaced Dougan already had there been a suitable alternative.”
Although the move raises the profiles of Shafir and De Boissard, the four co-heads are considered either too inexperienced or not well enough connected in the Swiss financial establishment
to take the top job. – Reuters