Credit Suisse board members close the ranks around CEO Tidjane Thiam as the Swiss bank tries to draw a line during a corporate espionage scandal.
The Zurich-based lender is battling its worst reputation crisis this year after it engaged a private investigator to track down the stalwart head of wealth management, Iqbal Khan.
The bank ordered the monitoring because of fears that Khan was preparing to post bankers and clients to bolster the fortunes of arch rival UBS, where he will begin in a similar role on Tuesday.
The corporate spying efforts went downhill this month after Khan confronted private investigators who were following him, leading to an angry change in central Zurich.
The unedited episode has raised questions about Mr Thiam's sentence, which had a rough relationship with Khan, in part because of a number of neighborly disputes over housing they own in Zurich.
Credit Suisse's board of directors is united in its belief that Mr. Thiam should remain as chief executive and that the bank was within its rights to try to find out whether Mr. Khan planned to pick out bankers and clients, according to two people briefed on their thinking.
One of the persons warned that the board had not yet digested the final version of an incident report, headed by an external law firm and overseen by John Tiner, a director who chairs the bank's audit committee. A final decision is expected to be made within the next few days.
The person said the report is likely to focus on the responsibility of Thiam executives and whether Investigo, the private investigative company, had exceeded its scope. [1[ads1]9659002CreditSuissesdidnotrespondtoarequestforcomment
The board's determination to support Thiam has been bolstered by the support of some major investors, including Chicago-based Harris Associates. Harris is the company's largest shareholder, with around 8.1 percent.
In an interview with the Financial Times, David Herro, Harris Associates' deputy, said he did not think the bank would fire any executives over the incident.
“These are people; people are not flawless, ”he said. "They don't make perfect decisions every time. And this is why unless the laws are broken, it doesn't seem like a case to anyone who loses their job."
Mr. Herro said that depending on the final conclusions of the investigation, " maybe … some bad judgment was shown on how best to protect stakeholders from an impeachable leader. I think at this point this is the worst thing to say. "
Will it affect a counterparty doing business with Credit Suisse? Will it affect a person of great value who transfers funds to Credit Suisse? I think it is doubtful. Most people outside [Zurich] do not care or have a strong opinion about This is another. "
Another prominent shareholder agreed that the episode was" not a going concern "for Mr Thiam, though they said they expected the bank's board to try to close the line this week and curb the flow of lurid headlines.
Ricky Sandler, CEO of Eminence Capital, a New York-based asset manager who owns 2 percent of the bank's shares, said he continued to "think aloud" about Mr Thiam and his team. "Losing the CEO or other members of senior management because of this would be a very unfortunate result," he said.
Meanwhile, Khan is expected to take up his new job this week as head of UBS's wealth management business. Some UBS bankers had wondered if the Swiss group would try to postpone the appointment after the group's leader, Axel Weber, held an interview in which he said the company was still doing due diligence on its new employee and did not want to "regret" hires.
"I totally expect him to be at the desk on Tuesday morning," said a person familiar with the appointment.
A UBS spokesman confirmed that Khan would begin work as planned.