Thomas Gottstein: Credit Suisse boss rocked by series of crises

At the height of the Credit Suisse “spygate” scandal – which then pitted Managing Director Tidjane Thiam against Iqbal Khan, his former protégé – another of the bank’s executives, Thomas Gottstein, was having dinner in the Kronenhalle, Zurich’s most prestigious restaurant.

Across the room, he spotted Khan’s personal PR advisor, who he said was stoking the flames. Gottstein interrupted the meal to walk around and scold him. The exchange was passionate enough that the other diners – sitting under paintings by Miró, Picasso and Chagall – craned their necks to see, people familiar with the setbacks will remember.

The episode marked a rare manifestation of public assault on the part of Gottstein, 57, who last year became the first Swiss national to lead Credit Suisse in 18 years. A surprise choice, he was widely seen as a sure pair of hands that would stabilize the ship after Thiam’s untimely ouster.

But Gottstein’s tenure has so far been anything but low-key.

This week, Credit Suisse admitted $ 4.7 billion in loss the collapse of Archegos, after lending billions of dollars to the family office and its risk controls were deemed insufficient.

Digging into Gottstein’s Problems, Credit Suisse May Also Have Lost Some of Its Major Ultra-Rich Clients up to $ 3 billion in funds managed by Greensill Capital, a supply chain finance company that collapsed into bankruptcy last month.

Both incidents marked a far cry from Gottstein’s commitment to start 2021 with aclean slate“. They once again put Credit Suisse in the spotlight and raised questions about the competence of its CEO – barely a year after his promotion on the battlefield. Internal and regulatory multiples loom probes.

Born in Zurich in 1964, Gottstein was not always intended for the upper echelons of European banking. A talented golfer, he represented Switzerland in five amateur world team championships between 1984 and 1992. He once had a handicap of +3 but now plays at -2.

An avid ski enthusiast, Gottstein is often seen in the Swiss ski resort of Klosters, where he spends time with his wife, two children and two dogs, including a Boston Terrier puppy that he took to Germany to recover on weekends. end after his promotion.

After a brief stint at UBS, Gottstein joined rival Credit Suisse in 1999 and first rose through the ranks of investment banking, including working on Glencore’s $ 11 billion IPO in 2011.

“He’s not the arrogant risk taker you sometimes find among American bankers,” said a Swiss banker who has worked with Gottstein on several transactions. “Attention to detail is probably one of his weaknesses, but other than that he’s very intelligent and understands risk and the financial markets.”

Gottstein caught Thiam’s attention when the Franco-Ivorian joined Credit Suisse in 2015, despite their differences in style and demeanor. Thiam was a good-natured, gregarious, global financial celebrity; Gottstein a more scruffy guy, little known outside Zurich, often dressed without a tie and with his sleeves rolled up.

The two entered into a bond and Thiam elevated Gottstein to the head of the lender’s national bank in 2016 ahead of the planned list of the company which was finally discarded. They stay close.

“He’s known to be too direct in his swiss at times, but I find him to be an extremely direct shooter,” said a former colleague. “I would be very surprised given his character that he would do something bad or lie. Another person who knows Gottstein described him as a “boy scout” for his stubborn adherence to the rules.

Walter Kielholz, outgoing chairman and former CEO of Swiss Re, said Gottstein had “a strong personality to lead an organization like Credit Suisse, in good times and in bad times”. He added: “He is deeply rooted in the company and in the business community.”

Just days after taking care of Gottstein last February, Europe entered the coronavirus-induced lockdown. He was applauded in Switzerland for leading a $ 20 billion package emergency loans to support small businesses, provided by 121 national lenders.

But in April it was under further pressure after Credit Suisse lost money Cafe Luckin, defaulted on a $ 518 million margin loan. The Swiss bank was part of a syndicate of banks that had lent to the Chinese coffee chain.

In the summer, Gottstein ordered a company overhaul aimed at reducing costs and improving efficiency. He promoted Lara Warner to Head of Risk and Compliance and Brian Chin to Head of Investment Banking.

It was to be short lived. In hastily organized board meetings over the Easter weekend, Gottstein proposed the removal of Warner and Chin, which was approved by his fellow directors, according to those involved in the rulings. The council pressured Gottstein to take decisive action after being blinded by the losses of Greensill and Archegos. Five other senior executives were also made redundant.

“The two people he promoted last year he had to fire,” a colleague said. “It must hurt.” Another added: “He can be very kind on a personal level, but he can be a bully when things go wrong, yelling and kicking his feet.”

Further losses followed in the second half of 2020. Credit Suisse took a $ 450 million write-down on its stake in US alternatives manager York Capital Management, and announced a potential $ 680 million affected by litigation on mortgage bonds in the United States in times of financial crisis.

After the Greensill and Archegos debacles, insiders believe Gottstein is another mistake far from losing his job. The new chairman of Credit Suisse – outgoing Lloyds CEO António Horta-Osório – arrives on April 30. “AHO,” as it’s called, is only a few weeks older than its CEO and has a much more practical style than its predecessor, Urs Rohner.

For Gottstein, the worry is that Horta-Osório may want his own “clean slate” to work.

Additional reporting by Arash Massoudi in London

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