The chief executive of Credit Suisse has vowed the bank will start 2021 with a “clean slate” after a torrid year that began with a damaging corporate spying scandal and was punctuated by embarrassing fallout from legacy compliance and lending failures.
Thomas Gottstein, who replaced the ousted Tidjane Thiam in February as head of Switzerland’s second-largest lender, told the Financial Times that 2020 had been “a clean-up year” for Credit Suisse, which was also caught up in alleged frauds at Luckin Coffee and Wirecard, having worked on deals for both.
He also acknowledged that the bank faced difficult decisions on bonuses this year, having to balance rewarding traders for a surge in revenues while remaining sensitive to the broader economic pain.
“There will never be a totally clean slate. We will always have issues, but it’s certainly my goal to start 2021 with as clean a slate as possible,” said Mr Gottstein, who talked to the Financial Times before Switzerland’s federal prosecutor announced on Thursday that it had filed criminal charges against the bank for allegedly facilitating money laundering.
Investigators said the bank processed more than SFr140m ($158m) of transactions between 2004 and 2008 for a clan of Bulgarian mafiosi engaged in cocaine smuggling and other illegal activity. Credit Suisse said it would “defend itself vigorously” against the charges.
Last month, Credit Suisse said it expected to take a $450m hit on its stake in York Capital Management after the US alternative asset manager said it would wind down its European hedge fund operations. The bank later revealed it faced up to $680m of losses from a US civil suit relating to residential mortgage-backed securities issued in 2007.
“My clear intention is to work through these legacy cases,” said Mr Gottstein. “2021 is the new era for Credit Suisse where we want to go into offence and we want to grow.”
Despite the damaging headlines, Credit Suisse played a key role in helping the Swiss government support small and medium-sized businesses through the pandemic. Its investment bank also performed well this year, thanks to a surge in trading.
Mr Gottstein said this created a challenge on how to balance rewarding staff who had exceeded targets at a time when the global economy has been hit hard and millions have lost their jobs.
“It’s too early to say, but generally you have to expect that bonuses will be down compared to last year and this is part of our solidarity and social responsibility,” Mr Gottstein said. “This is a challenge, but it’s something the whole industry is facing.”
This week, Lloyds Banking Group in the UK announced it had cancelled staff bonuses because of a sharp fall in profits, while rival Barclays has said it plans to increase bonuses for its traders.
UK and EU regulators reiterated this month that a condition of allowing banks to restart paying dividends next year is that they exercise “extreme moderation” on bonuses.
Finma, the Swiss regulator, has been less prescriptive on bank bonuses. But Credit Suisse’s compensation committee has already had meetings with the watchdog about its policy, according to people briefed on the discussions.
Swiss regulators have also lifted restrictions on shareholder payouts. In response, Credit Suisse has pledged to increase its dividend by 5 per cent a year and restart a SFr1.5bn share buyback plan, helping boost a share price that at one point was down as much as 50 per cent in 2020.
Still, Mr Gottstein is under pressure to close the gap with fierce rival UBS, which has navigated the pandemic better, ending 2020 around 1 per cent up in the stock market versus Credit Suisse’s 14 per cent decline.
In the decade since the financial crisis, UBS shares have fallen only 19 per cent compared with 70 per cent at Credit Suisse. In Zurich’s ultra-competitive financial circles, this may ultimately be what Mr Gottstein is judged on.