INVESTMENT
BANKING
Private jets, Wimbledon and banker insults: The
downfall of Credit Suisse’s António Horta-Osório
Some board members received complaints about how
Horta-Osório — known for his demanding style — spoke to staff and that he
sometimes didn’t wear a mask despite Covid rules
By
Margot
Patrick and
Emily
Glazer
Monday
January 24, 2022 9:09 am
After
relocating to Zurich last spring to run Credit Suisse Group as chairman,
António Horta-Osório flew to London and Lisbon for work meetings and business
events, then spent time with his family at homes there.
On multiple
occasions, a private plane paid for by Credit Suisse dropped him off on a
Thursday and returned empty to Switzerland, according to people familiar with
the travel. By Monday, a plane picked Horta-Osório up for work in Zurich.
The empty
flights were identified in a company review of his travel, which also
identified Covid-19 quarantine breaches in Switzerland and the UK. A person
close to Horta-Osório said the planes were rented, and couldn’t wait around for
the weekend. The person added that bank rules on the use of aircraft weren’t
broken.
The travel
review became fodder for Credit Suisse officials who pushed for Horta-Osório’s
departure, and caused his fellow board members to refuse to back him, people
familiar with the board said. The bank announced his resignation earlier this
week.
Horta-Osório
had committed to fix a deeply wounded Credit Suisse. He joined weeks after twin
client collapses — Greensill Capital and Archegos Capital Management — rocked
the bank. The Portugal-born banker came with a reputation for getting jobs
done. He was granted a British knighthood for restructuring Lloyds Banking
Group after the financial crisis.
In his
brief tenure at Credit Suisse, Horta-Osório guided a broad pullback in risk
taking and helped recruit new executives.
He also
offended longtime executives with attacks on Credit Suisse’s practices,
compensation and litigation strategies, according to people familiar with the
bank. Some board members received complaints about how Horta-Osório — known for
his demanding style — spoke to staff and about instances when people felt
uncomfortable that he sometimes didn’t wear a mask at the bank despite
Covid-19-related rules, the people familiar with the board said.
The price
paid by Horta-Osório was leaked information on his plane use and quarantine
breaches to the Swiss and international press, which preceded his resignation.
For the
board, an all-day sporting spree in July also stood out, the people familiar
with the board said. Horta-Osório and several family members watched Novak
Djokovic beat Matteo Berrettini in the Wimbledon men’s tennis final, then
travelled to north London’s Wembley Stadium to see Italy defeat England in the
finals of the UEFA European soccer championship.
The tickets
had been bought for clients who dropped out last minute, he told the bank, the
people familiar with his travel said. The total bill for the day was in the
tens of thousands of dollars, according to public ticket prices.
Horta-Osório
wasn’t supposed to be out and about in coronavirus-restricted England when he
went to the two events. He had flown into the country mistakenly believing
Credit Suisse got him an exemption from a 10-day quarantine, according to the
person close to Horta-Osório.
Credit
Suisse was founded by a Swiss entrepreneur in 1856 to promote commerce. By the
turn of the millennium, it had grown into a force on Wall Street and in
fast-growing Asian markets, reaping huge dividends for shareholders.
Then a
spate of scandals hit. Civil cases tied to toxic mortgages in the US cost it
billions in settlements in recent years. A unit pleaded guilty in the US last
year to defrauding investors in an $850m debt deal for a Mozambique state-owned
company.
Another
Fix-it who came via London, former Chief Executive Tidjane Thiam, resigned in
2020 after failing to contain reputational fallout from a spying scandal,
sparked when a former top executive found out the bank was tailing him.
On his
first day, April 30, Horta-Osório said publicly that the bank’s problems went
beyond anything he had experienced at a company.
The words
rang out like an insult to bankers, traders and other workers who considered
themselves guards of Credit Suisse’s unusual Swiss-American DNA of can-do and
discretion, according to current and former bank employees.
Horta-Osório
brought in key lieutenants and rolled out his Lloyds playbook. He set out to
explore Credit Suisse’s global footprint and meet staff, clients, investors and
regulators in person.
He zipped
to New York, Qatar, Singapore and London from his new base in Zurich, with
visits too to Spain and Portugal, which haven’t traditionally been big markets
for Credit Suisse. He addressed a Portuguese banking conference in Lisbon one
day in November, then flew to London to interview a job candidate.
The travel,
via private plane, seemed warranted to people around Horta-Osório because he
was building trust and showing commitment.
In late
November, the Omicron coronavirus variant flared in the UK Switzerland imposed
a quarantine on travellers from the country, ensnaring Horta-Osório on a trip
back from London. Through a health adviser working with Credit Suisse, he
sought a government waiver so that he could go to the office for meetings,
according to the people familiar with his travel. The waiver was refused, and a
few days later Horta-Osório headed to meetings in Madrid, unaware that the
Swiss rules didn’t allow for people subject to quarantine to depart.
He only
realised his error when details of the trip appeared in Swiss newspaper Blick,
the person close to him said.
Switzerland
has a complex social and business rulebook that can be hard for newcomers to
crack. A life of wealth and privilege is allowed for those who succeed, but it
should never generate headlines or be on display in times of crisis, according
to people who have worked at the bank. Also: Follow the rules.
Specific to
Credit Suisse, according to the people who worked there, is to behave
immaculately within Switzerland, where Credit Suisse is a ubiquitous business
and retail bank.
Some in the
upper echelons were feeling unsettled by changes pushed by Horta-Osório.
There were
rumblings that Eric Varvel, a 31-year veteran of the bank, was leaving. He had
been the head of the asset-management unit that ran $10bn investment funds with
Greensill. The funds had to be frozen when Greensill went bankrupt. Credit
Suisse is trying to get all the money back for fund investors.
But he was
also seen as a legend inside the bank for guarding his house with a bat during
riots in Indonesia and for persuading investors in Saudi Arabia and Qatar to
pump billions of dollars into Credit Suisse during the 2008 financial crisis,
according to people familiar with his career.
Chief
Executive Thomas Gottstein was the one who told Varvel he had to go, but it was
Horta-Osório who had made it clear it had to happen, according to people
familiar with the bank. Varvel’s departure was announced on 20 December.
There was
also growing tension with the bank’s general counsel, Romeo Cerutti, who had
held the top legal posting since 2009, according to people familiar with the
tensions. Horta-Osório viewed the lawyer as damaged since he had been at the
bank through a number of crises, some of the people said.
Staff at
Credit Suisse assembled pages of Horta-Osório’s flight logs and expenses and
handed them to law firms for the travel review. The information was also shared
with Swiss regulators. News of his whereabouts began appearing in the Swiss
press. That included having touched down in the Maldives to join his wife on
vacation on the way back from a Singapore business trip.
Horta-Osório
left Singapore a day early so that another executive could join him and take
the plane back to Zurich, according to the person close to Horta-Osório.
Just after
Christmas, Reuters reported that Credit Suisse found he had breached quarantine
while at Wimbledon. Board members who gave Horta-Osório a pass on the
Switzerland incident were disappointed, according to the people familiar with
the board.
Severin
Schwan, the lead independent director at Credit Suisse, is the chief executive
of Roche Holding, upping the ante for him to weigh in on the matter as head of
a health company. Schwan helped set the tone for other board members in viewing
the breaches as serious, the people familiar with the board said.
Horta-Osório’s
use of the private jet and attendance at the sports events also made some board
members uncomfortable. Some felt Horta-Osório wasn’t fully transparent about
his actions, according to the people familiar with the board.
Credit
Suisse had a potential successor in the wings. On 17 January, the board named a
new chairman, Axel Lehmann, a Swiss, former UBS executive who had joined Credit
Suisse’s board in October.
Write to
Margot Patrick at margot.patrick@wsj.com and Emily Glazer at
emily.glazer@wsj.com
This
article was published by Dow Jones Newswires
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