You almost feel sorry for Tidjane Thiam, the CEO of Credit Suisse. According to a New York Times article, he offended the firm’s princely investment bankers, apparently by speaking harshly to them and insisting they stop losing the shareholders’ money.
Now they are throwing their Gucci loafers at him and warning the castle is about to collapse.
Mr. Thiam has the unenviable task of restoring Credit Suisse to profitability at a difficult time for investment banks. Unlike many of its peers, Credit Suisse balked at taking drastic steps to restructure after the financial crisis, but since Mr. Thiam joined eleven months ago, he’s been cutting unprofitable activities and firing staff. His truly unforgivable sin was voluntarily cutting his bonus after the firm posted a loss.
Now, the bankers are in revolt, angered not only by their lighter paychecks but by Mr. Thiam’s cold-eyed style. Who knew investment bankers were so sensitive?
Once upon a time, when bankers didn’t like their bonuses or their place in the pecking order, they’d jump to another firm. Sometimes the mere threat to leave was enough to get management to pay up. But that tactic no longer has much force when there’s a surplus of banking talent.
So the threatened princes at Credit Suisse used the only weapon they had left: their ability to turn gossip into news coverage. Nothing excites a reporter like juicy anecdotes about turmoil inside a Wall Street firm, and the Times ate everything the bankers served. None of the complaining bankers were named, of course. The Times gave them anonymity, despite its editors’ frequent pledges to rein in the practice.
And no profile spun by anonymous sources would be complete without a few swipes at its target’s lifestyle and wealth. So we learn of Mr. Thiam’s purchase of a “luxury home in an exclusive lakeside enclave,” his “snugly tailored” suits and his “robust social life,” with appearances at “clubs in London and Davos.” These are juicy tidbits, but they don’t shed much light on Mr. Thiam’s strategy or its odds for success.
Every investment bank is struggling to keep its market share and profitability, and it’s easy to find unhappy bankers. So why focus on Credit Suisse? Perhaps the reason is Mr. Thiam’s outsider status. He is a former McKinsey consultant and chief of Prudential, a UK insurer. It’s likely he has few friends within the firm and few external relationships to call on when he’s under siege. He’s an easy target. Worse still, his communication team didn’t put up much of a fight on his behalf.
The Times article ends by comparing Mr. Thiam to another consultant-turned-CEO of a Wall Street firm, Phillip Purcell, who was ousted from Morgan Stanley in a banker-led coup in 2005. The bankers returned John Mack to the helm (ironically, he had been at Credit Suisse in the interim), and he quickly reversed Purcell’s strategy, embracing swashbuckling, high-risk activities like mortgage finance. Those businesses nearly ruined Morgan Stanley in the financial crisis a few years later.
The Credit Suisse bankers should be careful what they wish for.