* Credit Suisse CEO faces "make or break" 2013
* Revamp favours CEO Dougan, fortifies Americans in top
* CEO Dougan, board chairman Rohner in "marriage of
* Four unit co-heads in "Hunger Games" fight for succession
By Katharina Bart
ZURICH, Dec 3 Credit Suisse boss Brady
Dougan has outmanoeuvred an internal rival with his recent
revamp of the Swiss bank and management shake-up but is still on
borrowed time, senior banking sources say.
Dougan might have played his last hand with an overhaul that
strengthens the investment bank where the American made his
career before taking over as chief executive in 2007 while also
promoting two more executives to join the race to succeed him.
"The latest reorganization shows clearly that Dougan remains
under immense pressure," a former high-ranking Credit Suisse
banker says. "He will be replaced as soon as a suitable
successor is found."
The Credit Suisse reorganisation contrasts with hometown
rival UBS, which is abandoning most fixed-income
activities in favour of its flagship private bank as tough Swiss
capital rules begin eating into investment banking
Instead, Dougan, who has long defended the unit he used to
head from calls for a dramatic scaleback, announced a raft of
measures that confirm his desire to keep Credit Suisse at the
top table of investment banking.
In an affirmation of his commitment to the fixed income
business that UBS is shrinking, Dougan promoted French debt
banker Gael de Boissard as investment bank co-head alongside
American Eric Varvel, who will also run the Asia-Pacific region.
The asset management business will be integrated into the
private banking unit and its American head Robert Shafir
appointed co-head alongside private banking boss Hans-Ulrich
Meister originally pushed for the asset management
integration to strengthen his own unit, but Dougan outfoxed him
by stalling the move and making his ally Shafir joint head,
according to several sources close to the bank.
AMERICANS VS SWISS
The private bank that caters to the financial needs of the
wealthy had only just engineered a merger of Swiss retail and
private banking arms to cut costs but is the "net loser" of the
shake up, sources close to the bank said.
"They have been relegated to a supporting role and Meister's
effectively been demoted," by having to accept a co-head for the
unit he ran alone, a former senior Credit Suisse executive said.
The one Swiss banker among the four division heads, Meister
had made no secret within Credit Suisse of his ambitions for
Dougan's job. But Americans and investment bankers have gained
in influence with the overhaul, deepening a cultural tug-of-war
between Credit Suisse's U.S.-focused investment bank and its
less risky and more traditional Swiss-based private bank.
Dougan won praise for steering Credit Suisse through the
financial crisis without resorting to a government bailout like
UBS but has been criticized for squandering that advantage,
drawing an unusual call from the Swiss central bank earlier this
year to urgently bolster capital.
He has also drawn fire in Switzerland for spending much of
his time in New York and failing to learn German but cemented
his position when he marshalled support from key shareholders
for a package of measures to boost capital by 15.3 billion Swiss
francs in response to the central bank rebuke.
Credit Suisse's stock is little moved on the year at 22.05
Swiss francs - lagging a 20 percent rise in the European bank
index and a jump of 30 percent for UBS shares - albeit
it up a third from a trough of 15.97 francs hit in August.
"Management is under pressure to deliver," said JPMorgan &
Chase analyst Kian Abouhossein.
He says 2013 is a "make or break" year for Dougan, in which
the CEO must cut costs and scale back capital-intensive areas of
fixed income such as foreign exchange and commodities.
While Dougan has bought some time with the revamp, his
future is still uncertain despite recent public backing by
Chairman Urs Rohner, according to sources close to the bank.
Privately, Rohner has been more openly critical, two sources
said: "Rohner would've replaced Dougan already had there been a
suitable alternative," said one person familiar with Rohner's
Though the move raises the profile of Shafir and de
Boissard, the four co-heads are considered either too
inexperienced or not well enough connected in the Swiss
financial establishment, and will need time to prove themselves.
"I don't think any of them are suited or will ultimately get
Dougan's job, but Rohner has to signal he is thinking seriously
about succession," the top former Credit Suisse banker said.
A Credit Suisse spokesman said Meister, Shafir, Varvel and
de Boissard all declined to comment for this story.
"MARRIAGE OF CONVENIENCE"
Dougan managed to outmanoeuvre Meister in part because the
private banking head has not covered himself in glory since
taking over the unit last year, according to a senior banker at
Meister is perceived as botching the integration of
250-year-old independent boutique Clariden Leu as well as Eurom,
an information technology harmonization effort.
Though Meister, a corporate banker who rose through the
ranks in a 24-year career at UBS before jumping ship in 2008,
has the crucial Swiss connections needed to succeed in Zurich,
he lacks experience in international financial centres such as
New York, where Dougan, Shafir and Varvel made their mark.
That is still Dougan's trump card: Rohner noted recently
that he is one of the most experienced CEOs in the industry.
Rohner and Dougan, once rivals for the CEO job, have now
settled into a "marriage of convenience," according to the
person familiar with Rohner's thinking.
A lawyer who made his name as head of German media group Pro
Sieben and general counsel of Credit Suisse before taking over
as chairman last year, Rohner weighed a slew of alternatives
including what one person familiar with the matter described as
"the unthinkable": a UBS-style winding down of fixed income.
But Dougan ultimately convinced Rohner not to take the axe
to the investment bank because the chairman was reluctant to
make a bolder move, the person close to Rohner said.
"For all his intelligence and acumen, Rohner finds
decision-making difficult and hasn't shown himself to be a
visionary thinker," that person said.
Rohner and Dougan also declined to comment to Reuters.
Though Credit Suisse executives reject the comparison, a
key to the bank's future lies in UBS's decision to abandon
capital-heavy areas of fixed income, a move which has ratcheted
up the pressure on European rivals including Barclays
to make similar moves.
"The fact that Credit Suisse constantly references UBS says
it all: they're not coming at this from a position of strength
at all," the former Credit Suisse executive said.