London loses out following former Prudential boss Tidjane Thiam’s pivot east as head of Credit Suisse
When Tidjane Thiam announced last year that he was leaving Prudential, the market reaction was unambiguous: £1bn was wiped off the value of the company.
Thiam had presided over share price growth of 175 per cent during his five-and-a-half years at the top. His loss was never going to go unnoticed.
Prudential chairman Paul Manduca praised the qualities of “one of the most exceptional leaders in Pru’s long and illustrious history”. Little wonder, therefore, that the share price of Credit Suisse surged seven per cent on news of his appointment.
The sigh of relief was almost audible as the troubled bank embraced its new boss. He hadn’t worked in banking before, but was widely respected across financial services.
The Swiss giant needs him now more than ever, after shares hit a 24-year low yesterday following the reporting of its first full-year loss since 2008.
Read more: The exit of a chief exec who defied the odds
As we reported on our front page yesterday, these are particularly challenging times for banks as they grapple with market volatility, sluggish global growth, low interest rates and lower client activity.
Thiam is, however, in a bullish mood. Just as his time at the Pru was characterised by aggressive Asian expansion, he seems confident that a pivot east will restore the fortunes of Credit Suisse.
“We believe in Asia”, he said yesterday, adding that “in Asia our return on capital is 20, 25 per cent.” His strategy is to double profits in the Asia region by 2018 and he refuses to be deterred by current volatility.
While some may question this strategy, the banking chief calmly told CNBC yesterday that “this is not the first time in my career that analysts have disagreed with me”.
Unfortunately, while Thiam’s strategy may prove well judged for Credit Suisse, it seems that London is set to lose out. About 1,600 Credit Suisse staff in Canary Wharf will lose their jobs as part of his cost-cutting, meaning yesterday’s admission that “in London I’m sure morale is not great” may be an understatement.
“London has real cost challenges,” he said, adding: “We have put in London activities which should not be there and it’s my duty to shareholders to fix that. The world doesn’t limit itself to London.”
This stark, almost cruel swipe at the capital should be a warning to regulators and policy-makers that London’s pre-eminence is not guaranteed. Its success as a financial hub is based on many finely balanced factors.
Thiam never had any great affection for London. It was pragmatism that brought him here. Let’s hope that one day he can see the attraction again.