Trying to bank on trust
Credit Suisse chairman Urs Rohner is aiming to rebuild public trust in the banking industry, after its image suffered amid the financial crisis
"If you can't trust a Swiss banker, what's the world coming to?" said Pierce Brosnan, playing James Bond in The World Is Not Enough.
Trust is exactly what Credit Suisse chairman Urs Rohner thinks should be at the top of every banker's agenda right now, after the financial crisis in 2008 took a heavy toll on bankers' reputation and severely eroded the public trust they had come to enjoy in the boom years.
Credit Suisse coped with the financial crisis much better than its rivals as it did not need a bailout. Still, like other investment banks, the second-largest Swiss lender has had to commit to cut costs, by 4.4 billion Swiss francs (HK$35.9 billion) by 2015. Its Hong Kong operation is also said to be trying to sublet some of its office space at the International Commerce Centre to cut costs.
The 53-year-old chairman is optimistic Credit Suisse can meet the cost-cutting target in the short term, but said it would take much longer for the banking industry as a whole to rebuild the trust of customers.
"There is no easy or quick fix for rebuilding the trust and reputation we enjoyed in the old days. It takes one or two decades to build a strong, credible reputation but you can lose it in a short time. During the financial crisis, some banks and individuals made some very serious mistakes and the whole industry now has to make sure these mistakes are corrected," Rohner said in an exclusive interview with the South China Morning Post on a recent trip to Hong Kong.
"Banks have to deliver results consistently to rebuild their reputation. Running a bank needs capital as much as trust of customers and market participants. That is particularly important in the wealth management business as people will not give you their money to manage if they do not trust you."
Credit Suisse saw total assets under management grow to 1.25 trillion Swiss francs by the end of 2012, with new net assets growing by 146.8 billion francs over the previous four years.
Among the new regulatory measures being proposed for banks, the euro-zone countries from next year are likely to limit bankers' bonuses to one year of annual salary, while a Swiss referendum in March approved a law to allow shareholders to vote on compensation packages of senior executives.
Rohner believes these measures will enhance corporate governance by giving shareholders more say over executive pay.
Banking regulators the world over have also introduced tougher capital requirements, which Rohner said Credit Suisse has no problems complying with.
As of the end of 2012, Credit Suisse reported a core tier 1 capital ratio of 15.6 per cent and tier 1 capital ratio of 19.5 per cent - in line with international standards.
Rohner said Credit Suisse had a strong capital position even during the financial crisis, which explains how it was able to expand its wealth management business in recent years.
Rohner said Credit Suisse is ahead of its peers in adjusting its business model to the new bank capital regime, and will allocate capital where it can generate strong returns.
The bank will focus on private and investment banking, and the newly-combined private banking and wealth management units will be streamlined. In terms of markets, the bank is focusing on Asia, which is seeing rising wealth amid rapid growth.
Not a career banker, Rohner trained in law and spent the first 15 years of his career as a lawyer for financial institutions in his home country of Switzerland as well as in the US. He then ran a media company for five years before becoming Credit Suisse's group general counsel in 2004.
"I have always been interested in banking since I was young. So when I was offered the opportunity to join a bank, I accepted it," he said.
He became chief operating officer in 2006, vice-chairman in 2009 and was appointed chairman in 2011, with a term lasting until 2015.
The lawyer-turned-banker believes his background helps in communication with regulators and politicians, and is particularly useful as banks face heightened legal and regulatory scrutiny. "But that does not mean banks choose their employees because they have to be prepared to be sued," he quipped.
As chairman, he sets the broad strategy for the bank and lets chief executive Brady Dougan conduct the day-to-day management.
"We have a very close working relationship but that does not mean we have the same view on every issue. Sometimes we have very intense discussions before reaching a solution," Rohner said of his CEO.
Rohner said this distribution of labour is important to maintain checks and balances: "It is a mistake" for companies to have the same person as both chairman and chief executive.
"This is particularly important for big banks like Credit Suisse. There are so many facets to managing a bank, including managing internal and external stakeholders. It is always better if two people share the responsibilities."
To be successful, a banker needs to be hard working and understand the firm's values and codes of conduct, Rohner said.
"For senior executives, we look for people with a very strong sense of responsibility. Banking clients nowadays are increasingly sophisticated and the banking world has become more transparent. We need bankers who have both the entrepreneurial spirit to come up with new ideas as well as the integrity to serve customers in today's world."