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New President Horta-Osorio well trained for Credit Suisse testing

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ZURICH – Antonio Horta-Osorio will have to take deep advantage of the lessons he learned from switching to UK bank Lloyds when he joins Credit Suisse as its new chairman on Friday.

As one of Europe’s longest-serving bank CEOs, he has received applause for pulling Lloyds off the brink in 2011, when in an interview this month he said he was “about to die” after having to be rescued during the financial crisis.

At Credit Suisse, another of the toughest jobs in banking awaits “AHO,” as he was known at Lloyds, 57, which deals with damage caused by both the implosion of the US investment firm Archegos as well as the ramifications of the insolvency of the British supply chain finance company. Greensill.

Combined, these have led to billions of dollars in losses, layoffs and bonus cuts at Credit Suisse, just as other banks are making windfall profits on transactions and transactions.

The fallout continued just hours before the annual shareholders meeting began, when the bank said Andreas Gottschling, head of the board’s risk committee, will not stand for re-election.

While Switzerland’s second-largest bank is investigating what went wrong, its chief executive Thomas Gottstein has signaled a deeper review of the bank once Horta-Osorio arrives.

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“At Lloyds he was quite efficient in the reorganization. It sold non-essential and toxic assets with relative success, cut costs to the core and returned profitability and full private ownership to the bank, ”said Guy de Blonay, Jupiter’s fund manager.

PARALLEL LIVES

The Portuguese banker’s tenure at Lloyds spans the same decade as the outgoing Credit Suisse chairman, but Urs Rohner’s time has been marked by turmoil and doubts about the long-term direction of the Swiss bank.

A lawyer by training and CEO of German radio and television station ProSieben before joining Credit Suisse as general counsel in 2004, Rohner faced harsh criticism as he endured a series of losses and scandals over the past five years.

While Lloyds shares have fallen about 25% with Horta-Osorio, Credit Suisse shares have lost nearly three-quarters of their value with Rohner.

With the appointment of Tidjane Thiam as CEO in 2015, Rohner had set his sights on de-risking the bank and focusing on wealth management, two sources familiar with the matter said.

Yet despite the change spurred by Thiam, who left last year after a confrontation with Rohner over a spy scandal, Credit Suisse remains exposed to risky exchanges and relationships.

He lost more than $ 5 billion related to major brokerage client Archegos and faces further consequences of more than $ 10 billion in funds related to Greensill.

Including Archegos’ charge, write-offs and penalties paid by Credit Suisse since the end of 2015, total more than $ 15 billion, while facing at least three enforcement proceedings by the Swiss financial market supervisor FINMA.

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Rohner has largely stayed out of the limelight after the bank’s most recent run of problems. But he and Horta-Osorio have been in contact in recent months, said a source familiar with the matter, to ensure a smooth delivery.

Credit Suisse declined to comment.

EXHAUSTION

Horta-Osorio focused on expanding the relatively quiet retail banking, insurance and wealth management businesses at Lloyds and during his final results call on Wednesday, he said that returning it to private ownership in 2017 was the highlight of his tenure.

“More important than that was the journey along the way … achieving the purpose of helping the UK’s real economy as much as possible,” he said during a media call.

However, Horta-Osorio has not had an easy journey, facing scrutiny for his high salary compared to other British bank heads, his handling of a landmark fraud case and a payment insurance mis-selling scandal across the country. industry that ultimately cost Lloyds £ 22 billion and took years to resolve.

And he has spoken publicly about struggles with stress and insomnia when Lloyds was hit by the eurozone crisis of 2011.

“That led to a period of exhaustion, as you know, where I had to take a few weeks and then I came back. They were very bad days, ”Horta-Osorio said this week.

Analysts say your experience working on misconduct issues should come in handy when you join Credit Suisse at a time of risk management crisis.

“He is known for his great attention to detail and momentum, and we assume risk management will be at the top of his agenda,” said Maria Rivas, senior vice president of global financial institutions at DBRS Morningstar.

(Reporting by Brenna Hughes Neghaiwi and Oliver Hirt in Zurich; Additional reporting by Iain Withers in London and Matt Scuffham in New York; Editing by Alexander Smith and Jane Wardell)

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