Does Another Top CEO Face The Axe ?
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Can you imagine how Dougan must have felt when told earlier this week that a few traders at his investment bank had 'mispriced' mortgage securities assets, requiring a write-down of some $2.85bn ? Just a week after basking in the glory of record annual profits, Dougan now finds himself under pressure.
It was only a few days ago that Credit Suisse's boss said that 'into 2008, we clearly see risks'. Clearly he wasn't aware of the true nature of the risks that his own traders were taking at his own firm. He proudly boasted that Credit Suisse was 'well-positioned' to perform better then its peers as 2008 unfolded. We now know that Credit Suisse wasn't as well positioned as Dougan evidently thought.
True, $2.85bn in the scheme of things isn't that much - especially compared to the huge losses sustained by Citi, Merrill Lynch and UBS, but this Credit Suisse affair isn't really about the losses. As Stefan Raetzer from Allianz Global Investors says, 'the writedown isn't as much a problem here as the loss of confidence'.
Is it fair for Dougan to carry the can on this ? By all accounts, he is a decent bloke and an excellent professional. And he has only been in the top Credit Suisse role 9 months or so. But he previously ran the investment bank (and did a great job there too), and those running and monitoring the fixed income businesses are his picks. Much now depends on whether the bank's internal review uncovers any need for significant adjustments to the company's (already-posted) 2007 profits. If it turns out that a major restatement of earnings is required, Dougan, the first American to run Credit Suisse, will surely be toast. We hope that doesn't prove to be the case.
