Thus, Francesca McDonagh had to leave Ireland to find a bank in crisis.
When the then-Bank of Ireland chief executive signed on in April for a senior role at Credit Suisse, much of the attraction – apart from a pay rise – would have been the opportunity to try to help straighten out as many people as possible in Europe. bank prone to recent scandals.
The London-born banker did not expect, when she finally showed up at the Zurich group’s offices a few weeks ago, that she would soon be part of the management team fighting the feverish speculation of social media on capital, liquidity and the future of the bank. existence.
It would have been clear, of course, to McDonagh long before she did her first-round interview that Credit Suisse has deep cultural issues.
It’s a whole new experience to be part of a management team beleaguered since last weekend by unsubstantiated rumors that Credit Suisse is facing a Lehman Brothers-type moment.
She’s been here before. The hands-on approach the London-born banker took to solving tracker overload after joining Bank of Ireland in 2017 was tacitly acknowledged by the Central Bank last week as a turning point, even as it handed the lender a record fine of 100.5 million euros for his role. in the industry-wide fiasco.
And while the Irish public’s confidence in bankers remains at an all-time low, independent surveys of Bank of Ireland staff have shown that the bank’s internal culture has improved significantly under his leadership.
The challenge at Credit Suisse is on a whole different scale. Last year alone, the 166-year-old bank suffered a 4.8 billion Swiss franc (4.9 billion euro) blow due to its exposure to the collapse of US hedge fund Archegos Capital Management with a troubled past; he agreed to pay $475m (€485m) in fines to US and UK regulators to settle investigations into loans to Mozambique that were misspent on bribes and kickbacks de-wine of bankers; and he was forced to freeze $10 billion in customer funds that had been invested in UK supply chain finance company Greensill.
Last January, the group’s chairman for nine months, Antonio Horta-Osario, resigned after breaking Covid-19 quarantine rules and using the bank’s private jet to drop him off in the Maldives for a personal vacation.
The following month, Credit Suisse found itself taking rearguard action against a massive leak of data on thousands of bank accounts dating back to the 1940s, exposing how the bank handled the accounts of rights abusers. rights, fraudsters and sanctioned businessmen.
By the time McDonagh actually joined Credit Suisse last month, she had already been promoted from the planned position of CEO of the bank’s Europe, Middle East and Africa (EMEA) region to chief operating officer.
It also had a new boss, in the person of Ulrich Koerner, following the resignation of Thomas Gottstein, who had been CEO for just over two years, after the resignation of the previous incumbent, Tidjane Thiam, following a an executive spy scandal.
Will interest rates peak sooner than expected?
McDonagh’s employer for two decades before joining the Bank of Ireland, HSCB, was among the few major banks in the world (along with Credit Suisse) to have managed to avoid government bailouts during the financial crisis. She also joined Bank of Ireland long after the existential threat to Ireland’s financial system had evaporated.
It’s a whole new experience to be part of a management team beleaguered since last weekend by unsubstantiated rumors that Credit Suisse is facing a Lehman Brothers-type moment – triggering a sell-off in bonds and bank’s actions as well as a spike in costs. to take out a form of insurance on the financial markets, called credit default swaps (CDS), against the failure of the group.
Last Friday, a memo from Koerner highlighting the bank’s ‘capital and liquidity strength’, as it found itself at a ‘critical juncture’ as it prepared for restructuring, sparked controversy. reverse of the desired effect when its contents were leaked – and a slew of social media posters on Reddit and Twitter got busy.
A host of analysts have rushed to Credit Suisse’s defense in recent days, with the likes of JP Morgan saying the group has “healthy” capital and liquidity and Citigroup’s Andrew Coombs assuring clients “it’s not not 2008”. However, in banking – where the trust of counterparties, customers and staff is paramount – once the markets decide you have a problem, it can quickly become self-fulfilling.
The real restructuring ahead for Credit Suisse – at a time when financial markets are volatile – will be difficult.
Credit Suisse could stick – for now – to the schedule of delivering its new business strategy on October 27, when it unveils its quarterly results.
However, in an effort to calm the markets in the meantime, we have seen leaks in recent days that it is planning to put its Savoy hotel in Zurich on the market with a price tag of 400 million francs, and that it is looking to bring in an outside investor to inject funds into a spin-off of its advisory and investment banking businesses.
Analysts estimate that Credit Suisse needs to raise 4 to 6 billion francs in capital to shorten its balance sheet. It is hardly insurmountable.
On Friday, Credit Suisse opened another front, saying it would buy back 3 billion francs of its own debt, in a bid to bolster confidence in its cash position. It’s a small matter, of course, for a group that has nearly 700 billion francs in total liabilities. But buying bonds at discounted rates would allow him to realize small capital gains here too.
The self-help headlines of the past few days have seen the bank’s bond prices rally and CDS rates fall. Its shares jumped 30% from lows on Monday.
But the real restructuring that awaits Credit Suisse – at a time when financial markets are volatile – will be difficult.
If McDonagh is on a successful team, his own stock will only go one way.
#Francesca #McDonagh #endures #baptism #fire #Reddit #army #targets #Credit #Suisse
