Credit Suisse CEO Tidjane Thiam dropped a bombshell on investors: Caught off guard by a buildup of illiquid trading positions, the CEO said the bank will probably post a second straight quarterly loss as it unwinds the trades.
Bloomberg News reports that while Thiam earlier on Wednesday said that some of the positions were built unbeknownst to management in what he described as 'unacceptable' practices, within hours he said the traders were operating within their limits, which may have been too high.
The revelations raise questions about what senior management should have known when the firm set out its strategy to transform the bank in October - and when it later tapped investors for an additional $6.2bn to push through the overhaul, which Thiam said he’s now retooling in part because of the surprise losses.
“I wouldn’t fault the CEO for not completely understanding the ins and the outs, but the buck stops with the CEO,” said Ronald Colombo, a law professor and former counsel to Morgan Stanley. “The CEO has to have a team of trusted advisers who collectively understand what’s going on.”
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