He came to fix
Credit Suisse Group AG’s
broken culture. Then he became part of the problem.
was hoping for a slap on the wrist Sunday from the
board for breaking coronavirus quarantine rules on trips to events, according to people familiar with his departure. Instead, he had to leave his job as the bank’s chairman for not upholding the high standards he set when joining Credit Suisse eight months ago.
Mr. Horta-Osório had to leave after some members of the board refused to back him at a meeting that ran late into the Zurich evening, ending weeks of scrambling by the bank to contain its latest crisis. A bank probe into Mr. Horta-Osório’s travel found he had breached quarantine rules in England and Switzerland since starting at Credit Suisse, including to attend the Wimbledon tennis final in July.
The Portugal-born banker also used private aircraft hired by Credit Suisse to combine personal travel and work trips that made some on the board uncomfortable, according to people familiar with the matter.
A spokesman for Mr. Horta-Osório said the jet use was “in line with that of his predecessor in the role and actually similar to other senior colleagues in the bank. It was also never used without a business-related reason and this has been confirmed by an internal audit.”
Some members of the board were concerned Mr. Horta-Osório was no longer credible with employees or customers to fix what had come to be seen as a broken culture at the bank around risk taking, the people familiar with the matter said.
The sudden departure adds to a nightmarish stretch for the banking giant. In February 2020, Chief Executive
was ousted by the bank’s board for failing to contain the reputational fallout from a scandal that involved some staff being followed by private investigators. Then last year it was hit by twin crises, with the collapse of clients Greensill Capital and Archegos Capital Management.
Mr. Horta-Osório’s successor as chairman, who was appointed on Sunday, has been vetted by Switzerland’s financial regulator, having joined Credit Suisse’s board in October after working at rival
for more than a decade.
Mr. Lehmann is described by people who have worked with him as an archetypal Swiss professional, with a pleasant demeanor and tough interior. One attribute he brings to the role is a high-functioning relationship with Swiss regulators and other power brokers in the country, some of the people said.
Mr. Horta-Osório’s departure makes him one of the biggest casualties of coronavirus rule breaches. Two Canadian executives resigned from their posts last year after traveling to get vaccinated. Separately, the head of a Canadian pension fund resigned after The Wall Street Journal reported he traveled to the Middle East to get an early vaccine dose.
In December, Mr. Horta-Osório apologized to the board—and publicly—for leaving Switzerland when he was supposed to be in quarantine after a trip to London. He said it was inadvertent. He also apologized to board members for using private aircraft hired by Credit Suisse to stop off for a vacation in the Maldives on the way back from a work trip, people familiar with the trip said. His stance was that the travel complied with company rules, according to some of the people.
The deterioration in some on the board’s trust escalated after Reuters reported in late December on Mr. Horta-Osório’s Wimbledon trip and quarantine breach, according to some of the people. In the new year, the board’s audit committee reviewed a report into his travel and the quarantine breaches, and Credit Suisse started preparing for Mr. Horta-Osório’s possible departure, according to some of the people familiar with the matter.
The timing of the missteps struck a nerve with many Credit Suisse employees, and the order-minded Swiss public. Swiss media compared Mr. Horta-Osório’s conduct to that of British Prime Minister
and tennis star Novak Djokovic, who fanned anger this year for appearing to be unfettered from national coronavirus restrictions.
Credit Suisse is an elite banking brand abroad, but at home in Switzerland has household and business customers of all sizes as the country’s No. 2 bank by assets. Having the top person failing to comply with Swiss rules was seen as an unacceptable situation, according to some of the people familiar with the matter.
One of the people familiar with the matter said Mr. Horta-Osório attended Sunday’s meeting hoping to be fully supported by the board, which includes recent appointments he made. The chairman resigned when it became apparent he didn’t have enough support.
Mr. Horta-Osório was supposed to save Credit Suisse from being scandal-prone. He received a British knighthood for his last job turning around the U.K.’s
adding to civil awards in Spain, Brazil and Portugal. People who have worked with him said he is demanding, exacting and takes his reputation seriously.
He agreed in late 2020 to join Credit Suisse as its chairman, a prestigious role in Switzerland for an institution that dates to 1856. The idea was it would be his main job alongside several other board mandates, to ease into a less-stressful existence than running Lloyds, according to people familiar with his planning.
Mr. Horta-Osório’s tenure at Lloyds wasn’t without drama. Eight months into that job, in 2011, he took a two-month hiatus to check into a rehabilitation clinic suffering from exhaustion. Then, in 2016, he apologized to Lloyds staff after the Sun newspaper published photographs of Mr. Horta-Osório, who is married with three children, with another woman during a work trip to Singapore. He said he regretted the adverse publicity and damage to Lloyds’s reputation. He said he paid for any personal expenses on the trip.
A few weeks before his April 30 start date, Credit Suisse incurred a loss of more than $5 billion when Archegos, a family investment firm led by
defaulted on large stock positions.
Mr. Horta-Osório sought to reset the risk button, shedding the bulk of Credit Suisse’s unit servicing hedge funds and centralizing oversight at its main units. He exhorted employees to be more personally responsible and accountable for their actions, and, according to people familiar with the matter, put Chief Executive
and other top executives on notice to hit the top of their game or leave.
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