Oswald Grübel is to stand alone at the helm of Switzerland's second biggest bank, after Credit Suisse decided not to renew the contract of joint CEO, John Mack.This content was published on June 25, 2004 - 08:58
Mack, an American, will step down next month as part of a reorganisation, which will divide the group into three divisions.
Credit Suisse said in a statement that Mack had agreed with the board of directors not to renew his contract which expires in July.
He will be replaced at the helm of CSFB by Brady Dougan, who was recently appointed head of the unit’s international businesses.
Mack took up his post as joint CEO in January 2003 following the departure of Lukas Mühlemann, who left CS at the end of 2002.
Mack is credited with restoring CS’s investment banking unit, Credit Suisse First Boston (CSFB), to profit.
Too many cooks?
But some analysts believe it was a mistake to put two managers at the helm of the bank.
"The history of co-CEOs is replete with unpleasant outcomes," said Michael Holland of money management firm Holland & Co, "and this is one more."
There were mixed signals from the markets following news of Mack's imminent departure.
Shares in CS fell back by more than two per cent during early trading on Friday before recovering to close at SFr44.90, gaining over two per cent on Thursday's closing price.
News of his departure, announced on Thursday night, caught out even top executives at CSFB’s offices in the United States.
One company source said the firm’s managing directors met senior US executives on Thursday morning but were given no indication a change was in the works.
Mack, who was ousted as boss of Morgan Stanley in March 2001, restored CSFB to profit last year after two years of heavy cost-cutting and thousands of sackings, which earned him the nickname “Mack the Knife”.
During his tenure, Credit Suisse reversed a $1.2 billion loss in 2002 and notched up a profit of $870 million in 2003.
Earlier this year he launched an ambitious plan to double the firm’s profit by 2006.
Mack’s departure on July 13 will herald a reorganisation of the bank into three divisions – all under the direction of Grübel - replacing the two that exist at the moment.
Investment banking and wealth and asset management will be grouped together at CSFB (Credit Suisse First Boston).
Financial services, including global private banking and corporate and retail banking in Switzerland, will fall under the umbrella of Credit Suisse, and the group’s insurance operations will remain with Winterthur.
All options open
Chairman Walter Kielholz said on Thursday that all opens remained open regarding Winterthur, including the possible sale of the insurance unit.
He ruled out mergers for the group as a whole, however, dampening ongoing speculation that Credit Suisse might be considering a cross-border tie-up with Deutsche Bank.
“We see no value in a cross-border merger,” he told Reuters, citing cultural, institutional and regulatory differences.
“CSFB remains a major pillar of Credit Suisse’s strategy in the future. That is a very firm statement.”
Bankers and analysts have been calling for more consolidation for years, but many bankers complain that regulatory barriers make mergers too complex.
“Our goals now are to accelerate organic growth and strengthen the competitive positioning of our core banking business,” said Kielholz.
swissinfo with agencies
Mack joined Credit Suisse in July 2001, as CEO of the investing banking unit, CSFB.
He was named joint CEO of Credit Suisse group in January 2003.
His is widely credited with turning around the fortunes of CSFB, after cutting thousands of jobs.
He left Morgan Stanley under a cloud in March 2001, after a 30-year career at that bank.
Credit Suisse was founded in 1856.
It operates in 50 countries employing 60,000.
In the first quarter of 2004, the group posted net profit of SFr1.86 billion.