Both Tidjane Thiam and John Cryan have been at the helm of their respective banks, Credit Suisse and Deutsche Bank, for a year. And both have had to fight hard at the top of their financial institutions. But who is doing a better job?
Exactly a year ago they were thrown in at the deep end. Tidjane Thiam took over the reins from his predecessor Brady Dougan at the Swiss banking giant Credit Suisse (CS); Meanwhile in Frankfurt, the former chief financial officer of UBS John Cryan (pictured below) stepped into the shoes of Deutsche Bank’s ousted leadership duo Juergen Fitschen and Anshu Jain.
Both men knew that they had been taken on by the respective boards as turnaround managers. But little did they know how challenging the task would turn out to be.
One year on, shares in both large lenders are lying significantly below the average for the sector – the value of the share price of both banks has roughly halved over that time, which makes them «dogs» in trading jargon. And the two bosses, who have yet to prove themselves properly, have become «underdogs».
Obviously both Thiam and Cryan said right from the beginning that the overhaul of their banks would take time. But just one year after they moved into the CEO’s office, investors and experts are running out of patience. They are now venting that anger publicly.
To add fuel to the fire, Bloomberg news agency asked 11 financial investors and seven analysts to grade the two CEOs. The report that was put together from these grades is not exactly flattering.
Failed the job
Those who took part in the informal survey evaluated the banking bosses in different categories (see table below) on a scale of one to 10, where six is a passing grade. Across all categories both Thiam and Cryan did not manage to score higher than five – from the point of view of investors and experts they both failed in their jobs.
Like all rankings, this one from «Bloomberg» should be enjoyed with caution. The result is a bitter pill for Thiam, who has had to face abundant criticism from many directions in recent weeks. Overall he came away with worse grades than his counterpart in Deutsche Bank, Cryan.
Thiam's Soft Factors
However, Thiam scored best in the categories central to the task he is actually undertaking, the strategic overhaul of Switzerland’s second-largest bank. In the categories of strategic thinking, the chance of introducing cultural change and a new direction for the powerful investment bank, the Ivorian-born top executive scored better than Cryan.
But he lost significant ground in the so-called soft factors, such as communication and the way in which strategy is put into practice. There is some background to this: since the surprising write-downs of billions in the investment bank and a rebellion among Credit Suisse traders in Wall Street, Thiam had to endure criticism of his style from large shareholder U.S.-based mutual fund Harris Associates.
In a critical appraisal of Thiam’s impact in his first year at Credit Suisse, finews.ch also came to the conclusion that most of his mistakes were seen in so-called soft factors.
Safer than ever?
That is enough to cast «hard» success in an unfavourable light. Credit Suisse pointed out to Bloomberg that it had «massively» reduced the level of risk in its investment bank and at the same time had more available equity than at any point in recent years.
Thiam also made reference to this point recently in the Swiss Sunday newspaper «Sonntagsblick». He stressed that the Credit Suisse group would remain together and that a takeover was out of the question.
In the meantime, Credit Suisse shares began the week only slightly above 10 francs. Like all «underdogs», Thiam has to prove more than ever what he can do.
