Some readers derided my story in last November’s column where I asked: “Is it bonfire night or bonfire of the vanities at Credit Suisse?” I criticized the bank for its recent compensation payouts against a backdrop of poor share performance and disappointing third-quarter results.
Regular readers of this column know that sometimes I get there first. This is probably luck rather than judgement. In mid-December, I was therefore amused to read the headline on the front page of the Financial Times: ‘Credit Suisse chief defends pay move.’ And later, in the same edition, an interview with chief executiveBrady Dougan, entitled: ‘Credit Suisse toils to convince it can thrive post-crisis.’
Credit Suisse shares were down 26% as of December 20. This was a weak performance compared with other top banks such as JPMorgan (down 5%), Goldman Sachs (down 3%) and Deutsche Bank (down 10%). Dougan is one of the most intelligent and least arrogant banking chiefs in the business. I hope the strategy that Credit Suisse is pursuing and its model of a low-risk, client-facing investment bank prove to be the right ones. And if they do not, I hope Dougan can turn the ship around quickly enough.
I have worried for a while that Credit Suisse might not have enough exposure to the world’s growth economies. Switzerland, its domestic market, is about as mature as banking sectors come. However, Credit Suisse has a fantastic private banking franchise that should be well positioned in the emerging markets and a strong emerging market franchise within its investment bank. I look forward to discussing these issues with Credit Suisse’s European chief executive, Fawzi Kyriakos-Saad, when I catch up with him later in the year.