Credit Suisse’s António Horta-Osório has lost board support following a breach of Covid-19 rules

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He came to fix the Credit Suisse Group AG

broken culture. Then he became part of the problem.

António Horta-Osório was hoping for a slap on the wrist on Sunday from Credit Suisse CS 0.38%

counsel for breaking coronavirus quarantine rules while traveling to events, according to people familiar with his departure. Instead, he had to quit as the bank’s chairman for failing to live up to the high standards he set for himself when he joined Credit Suisse eight months ago.

Mr Horta-Osório had to leave after most board members refused to back him at a late evening meeting in Zurich, ending weeks of attempts by the bank to contain its latest crisis. A bank inquiry into Mr Horta-Osório’s trip revealed he had broken quarantine rules in England and Switzerland since his early days at Credit Suisse, including to attend the Wimbledon tennis final in July.

The Portuguese-born banker also used private jets hired by Credit Suisse to combine personal and business travel, which made some board members uncomfortable, according to people familiar with the matter.

Credit Suisse has discovered that President António Horta-Osório broke quarantine rules in England and Switzerland.


Photo:

Chris J. Ratcliffe/Bloomberg News

A spokesman for Mr Horta-Osório said the use of the jet was “in line with that of his predecessor in the role and indeed similar to that of other senior colleagues at the bank”. It has also never been used without a commercial reason and this has been confirmed by an internal audit.

Some board members worried Mr Horta-Osório would no longer be credible with employees or customers to fix what had become a broken culture at the bank around risk-taking, people familiar with the matter said. .

The sudden departure adds to a nightmarish stretch for the bank. In February 2020, chief executive Tidjane Thiam was ousted by the bank’s board for failing to contain the reputational fallout from a scandal that involved some staff being tracked by investigators. private. Then last year it was hit by a double crisis, with the collapse of clients Greensill Capital and Archegos Capital Management.

Axel Lehmann, Mr Horta-Osório’s successor as chairman, who was appointed on Sunday, has come under scrutiny from Switzerland’s financial regulator, after joining Credit Suisse’s board in October after working at rival UBS Group AG for more than a decade.

Mr. Lehmann is described by those who have worked with him as the archetypal Swiss professional, with a pleasant demeanor and a tough interior. One attribute he brings to the role is a high-level relationship with Swiss regulators and other power brokers in the country, some people said.

Mr Horta-Osório’s departure makes him one of the biggest victims of coronavirus rule breaches. Two Canadian executives quit their jobs last year after traveling to get vaccinated. Separately, the head of a Canadian pension fund quit after the Wall Street Journal reported he traveled to the Middle East to get an early dose of vaccine.

In December, Mr Horta-Osório apologized to board members – and publicly – for leaving Switzerland when he was supposed to be in quarantine after a trip to London. He said it was inadvertent. He also apologized to board members for using a private plane hired by Credit Suisse to stop for a holiday in the Maldives after returning from a work trip, people familiar with the trip said. His position was that the trip was in line with company rules, according to some people.

The deterioration in confidence among some board members intensified after Reuters reported in late December on Mr Horta-Osório’s trip to Wimbledon and breach of quarantine, some people say. In the new year, the board’s audit committee reviewed a report on his travel and quarantine violations, and Credit Suisse began preparing for Mr. Horta-Osório’s possible departure, according to some people familiar with the matter.

Mr Horta-Osório attended the Wimbledon tennis final believing a waiver of England’s quarantine rules had been arranged for him by Credit Suisse, his spokesman said. Mr Horta-Osorio attended the tournament with family members and a bank adviser after Credit Suisse clients were cancelled, he said.

The timing of the missteps has touched the nerves of many Credit Suisse employees and the law-and-order Swiss public. Swiss media have compared Mr Horta-Osório’s conduct to that of British Prime Minister Boris Johnson and tennis star Novak Djokovic, who have drawn anger this year for appearing to be free of national coronavirus restrictions.

Credit Suisse is an elite banking brand abroad, but at home in Switzerland, it serves households and businesses of all sizes as the country’s No. 2 bank by assets. According to some people familiar with the matter, the non-respect of Swiss rules by the most important person was considered an unacceptable situation.

One of the people familiar with the matter said Mr Horta-Osório attended Sunday’s meeting hoping to be fully backed by the board, which includes recent appointments he has made. The president resigned when it became apparent that he did not have enough support.

Mr. Horta-Osório was supposed to save Credit Suisse from being prone to scandals. He received a British Knighthood for his last employment with Lloyds Banking Group PLC of the United Kingdom.,

in addition to civil awards in Spain, Brazil and Portugal. People who worked with him said he was demanding, demanding and took his reputation seriously.

He agreed at the end of 2020 to join Credit Suisse as chairman, a prestigious role in Switzerland for an institution that dates back to 1856. The idea was that this would be his main job alongside several other terms on the board, to blend into a less stressful existence than running Lloyds, according to people familiar with his planning.

Mr Horta-Osório’s tenure at Lloyds was not without drama. After eight months of work, in 2011 he took a two-month break to attend a rehabilitation clinic suffering from exhaustion. Then in 2016 he apologized to Lloyds staff after the Sun newspaper published photographs of Mr Horta-Osório, a married father of three, with another woman on a work trip to Singapore . He said he regretted the bad publicity and reputational damage to Lloyds. He said he paid all personal expenses for the trip.

Weeks before its April 30 start date, Credit Suisse suffered a loss of more than $5 billion when Archegos, a family investment firm run by Bill Hwang, defaulted on large equity positions.

Mr Horta-Osório has sought to reset the risk button, getting rid of most of Credit Suisse’s hedge fund management unit and centralizing oversight of its core units. He urged employees to be more personally responsible and accountable for their actions and, according to people familiar with the matter, warned chief executive Thomas Gottstein and other senior executives to get to the top of their game or leave.

Write to Margot Patrick at [email protected] and Emily Glazer at [email protected]

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