LLOY Lloyds Banking Group Plc

By Margot Patrick 

Credit Suisse Group AG named António Horta-Osório as its next chairman Tuesday, marking a changing of the guard after a decade under current chairman Urs Rohner punctuated by regulatory fines and scandal.

Mr. Horta-Osório said on Monday he was leaving his job as chief executive at Britain's Lloyds Banking Group PLC. The Portuguese executive is one of Europe's most highly regarded bankers after a turnaround at Lloyds, and Mr. Rohner said he brings an "impressive record of accomplishments." Shareholders will vote on the proposed appointment at the bank's annual meeting in April. Mr. Rohner had said he would leave Credit Suisse when he hits a 12-year term limit at that meeting.

The change comes as Credit Suisse is navigating the coronavirus pandemic under a new CEO, Thomas Gottstein. It is also seeking to move on from a damaging spying scandal that led to the ouster of former CEO Tidjane Thiam in February for failing to contain the reputational fallout. The Wall Street Journal on Monday reported that lawyers hired by Credit Suisse found two incidents of the bank putting employees under observation by investigators, predating two others in 2019 that the bank had blamed on an executive who was fired. Switzerland's financial regulator started enforcement proceedings on how the bank controls and documents such activities in September. Those proceedings are ongoing and Credit Suisse says it is cooperating.

Credit Suisse separately said Tuesday that it could take a provision in the fourth quarter to reflect a potential $680 million judgement for damages being sought in a New York civil court. It has already has taken a $300 million provision in the case, it said. Credit Suisse said it believes it has strong grounds to appeal such a judgement.

The potential provision adds to an unexpected $450 million fourth-quarter charge announced by the bank last week to reflect changes at a U.S. asset manager in which it holds a 30% stake.

At Lloyds, Mr. Horta-Osório, 56, carried out a sweeping overhaul in the wake of the financial crisis. The bank narrowed its focus largely to the U.K., shedding most of its investment banking and investment units and simplifying its operations.

The bank's cost to income ratio fell to 48.5% last year from 56.8% in 2012.

Mr. Horta-Osório also played a pivotal role early in his tenure in getting the U.K.'s banks to voluntarily start compensating millions of customers who had been mis-sold insurance. The industry initially thought the bill would be around GBP5 billion, equivalent to $6.66 billion, but it spiraled as more claims came in, and Lloyds alone has paid out GBP22 billion to affected customers.

While Mr. Rohner has been chairman, Credit Suisse also underwent an overhaul to adapt to changes in banking after the financial crisis. Its strategy under Mr. Thiam to focus on wealth management has paid off so far in the pandemic. Loan-loss provisions have been relatively contained compared with other European banks, reflecting its lending in its conservative Swiss home market and to the wealthy.

Mr. Rohner's governance of the bank has come under attack from some shareholders, though. During his tenure, the bank paid billions of dollars in fines and settlements to authorities in the U.S. and globally over alleged regulatory failings and misconduct

Write to Margot Patrick at margot.patrick@wsj.com

(END) Dow Jones Newswires

December 01, 2020 05:41 ET (10:41 GMT)

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