The 57-year-old loses boardroom battle and Thomas Gottstein will replace himProfile: man who traded politics for finance after military coupThe Credit Suisse chief executive, Tidjane Thiam, has been ousted after losing a boardroom battle that escalated after a spying scandal engulfed the Swiss bank last year.The bank’s board announced on Friday that it had “unanimously accepted” the 57-year-old’s resignation and that Thomas Gottstein, the head of Credit Suisse’s home business in Switzerland, will take over as chief executive. The board also gave its full support to the chairman, Urs Rohner, to complete his term until April 2021. Continue reading...
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Credit Suisse is overhauling its bonus structure for investment bankers and asking them to agree to a new claw-back provision on cash for people that jump ship
Credit Suisse is overhauling its bonus structure for its struggling investment banking and capital markets division,...Credit Suisse is overhauling its bonus structure for its struggling investment banking and capital markets division, and instituting stiff clawback penalties. Under the new plan, cash bonuses will be paid in the form of an "upfront cash award," which in practice functions like a three-year, interest-free loan. Employees who leave early will have to pay back compensation. The bank, which is set to announce bonuses February 11, is requiring employees to sign an agreement accepting the new terms. The new terms come amid a bombshell announcement on Friday that CEO Tidjane Thiam will leave the firm following a spying scandal. The 2019 bonus pool for the dealmaking unit is expected to fall by as much as 25%, two industry sources told Business Insider Visit Business Insider's homepage for more stories. Credit Suisse is overhauling its bonus structure for its struggling investment banking and capital markets division, imposing financial penalties that will make it more financially onerous for higher-earning bankers to depart for rivals. The firm on Wednesday finalized a new compensation plan for its dealmaking group, including a provision requiring the cash portion of a bonus to paid in the form of an "upfront cash award" with stiff clawback provisions, according to people familiar with the plans. The new terms come amid a bombshell announcement on Friday that CEO Tidjane Thiam will leave the firm following a spying scandal. Thomas Gottstein, the current head of Credit Suisse's Switzerland division, will take over as CEO. The payment in practice is akin to a three-year, interest-free loan, and bankers who leave or are fired for cause within three years of earning a cash award will have to pay back the remaining term portion based on the pre-tax amount. It doesn't apply to junior investment banking ranks, the sources said. Like most Wall Street firms, Credit Suisse pays its top earners partially in cash and partially in deferred stock that vests over several years — with the highest earners drawing more of their bonus in equity. Under the new plan, which only affects higher earners in the Investment Banking and Capital Markets division, Credit Suisse will pay the cash portion via an upfront cash award, essentially a forgivable loan that vests monthly over the course of 36 months, the people said. For instance, an employee who received a bonus and resigned 12 months later would be required to pay back two-thirds of the awarded money, based on the pre-tax amount. A Credit Suisse spokesman declined to comment. Bonuses, which are considered supplemental income, are taxed at a higher rate in the US than a traditional salary. The stock portion will remain on a three-year vesting schedule. The bank, which is scheduled to communicate 2019 compensation to staff on February 11, is requiring employees to sign an agreement accepting the new terms, or otherwise forego the cash portion of their bonus, the people said. While atypical, a compensation plan with such clawback penalties isn't unprecedented, even within Credit Suisse. The firm last year implemented a similar compensation plan among senior bankers in its Asia-Pacific division. Jefferies is also known to impose stiff clawback provisions on employee compensation. The more restrictive bonus system is the latest blow for Credit Suisse's beleaguered dealmaking division, which has underperformed the rest of the firm. Credit Suisse in 2019 fell to the 7th from 6th on the global investment banking fee league table, as its market share decreased to 3.8% from 4.3%, according to Dealogic. In November, Thiam appointed David Miller as the head of the investment banking and capital markets group, replacing Jim Amine. The Financial Times reported last week that the Swiss bank had frozen its overall bonus pool for the second year running, as gains in sales and trading were offset by lackluster performance in advisory and capital markets. Two industry sources told Business Insider the bonus pool for the dealmaking unit was expected to fall by as much as 25%. Join the conversation about this story » NOW WATCH: WeWork went from a $47 billion valuation to a failed IPO. Here's how the company makes money.
UBS had 2 multi-billion-dollar clients pull their money out of its massive Americas wealth business, driving overall fourth-quarter outflows
Two large UBS clients withdrew money from the bank's wealth management arm in the Americas during...Two large UBS clients withdrew money from the bank's wealth management arm in the Americas during the fourth quarter. One of the clients had an account between $3 billion and $4 billion, while the other was between $1 billion and $2 billion, a person familiar with the matter said. Those outflows helped explain the bulk of the overall unit's $4.7 billion fourth-quarter outflows that the Swiss bank reported in its earnings on Tuesday. The wealth management unit's adviser force meanwhile shrank again. The firm had 10,077 advisers globally as of December 31, a 6% drop from one year earlier. Visit BI Prime for more wealth management stories. Two ultra-wealthy clients pulled money out of UBS wealth business in the Americas late last year, driving the lion's share of a global $4.7 billion in outflows from the bank's wealth management arm during the fourth quarter, according to a person familiar with the matter. One of the clients had an account between $3 billion and $4 billion, and one was between $1 billion and $2 billion, according to the person, who requested anonymity to discuss a private matter. The Swiss bank's wealth management business, which is the world's largest, reported its Asia-Pacific and Switzerland regions had net inflows, finance chief Kirt Gardner said on a call to discuss earnings with analysts early Tuesday. Those two Americas clients were "very low-margin accounts," Gardner said, suggesting they were not accounts that were immediately profitable to the business. He highlighted that full-year net new money of $31 billion was "particularly strong" into Asia-Pacific, a region where the wealth management unit hopes to expand. In the third quarter, net new money for the unit totaled $15.7 billion. Global wealth management — one of the bank's four business lines along with personal and corporate banking, asset management, and investment banking — has been a main focus under chief executive Sergio Ermotti and wealth co-heads Tom Naratil and Iqbal Khan. Khan, who joined last year from Swiss competitor Credit Suisse, and Naratil are aiming to increase the unit's efficiency through a broad business reorganization across regions. UBS has long been a leader in managing money of the world's ultra-wealthy clients, and has more recently emerged as the firm's more stable business while its investment bank struggles. The firm earlier this month said it was overhauling its global wealth management division with structural changes across regions, according to a company memo reviewed by Business Insider, after similar changes were made in the US. It's all an effort to expand its menu of specialized client offerings, particularly bespoke family office services, and speed up advisers' decision-making and productivity through a closer relationship with investment banking. It was widely reported earlier this month that the unit would slash hundreds of jobs to cut costs. On the firm's Tuesday call, Gardner called the global family office group "one of our highest-growth opportunities" for the wealth management unit. The wealth management unit's adviser force meanwhile shrank again during the fourth quarter. The firm had 10,077 advisers globally as of December 31, a 6% drop from one year earlier. Overall staff within the business fell by 4% to 22,681 employees. Some large adviser teams, some of whom oversaw $1 billion or more, left the firm last year for smaller shops or rival firms. Peer US wealth managers Wells Fargo, Merrill Lynch, and Morgan Stanley have all seen similar exits. One UBS team managing some $7.5 billion in assets left to join RBC Wealth Management in California last month, and earlier in 2019 a team overseeing $1 billion in client assets left for Rockefeller Capital Management. UBS has meanwhile made some notable US recruits, including a large North Carolina-based private wealth team, formerly with Merrill Lynch. The team oversees some $10.8 billion in client assets. As Business Insider reported over the summer, UBS has pulled together a new group to help its wealth advisers provide a "family-office"-like experience, and that comes as the bank works to make good on raking in $70 billion in new US assets over three years. Read more: UBS is bringing back a junior analyst role in its wealth management arm as the industry grapples with recruiting fresh talentJoin the conversation about this story » NOW WATCH: WeWork went from a $47 billion valuation to a failed IPO. Here's how the company makes money.