Credit Suisse Group (CS) - Get Report said Tuesday that CEO Tidjane Thiam was not aware that one his closest allies at the bank had hired a private investigator to spy on a senior official who had recently been hired by cross-town rival UBS Group AG (UBS) - Get Report .
The exoneration of Thiam followed a month-long investigation by Zurich's Homburger law firm into a series of allegations that have rocked the Swiss banking elite. Chief operating officer Pierre-Olivier Bouee was found to have acted alone in ordering the surveillance of Iqbal Khan, the co-head of the bank's profitable wealth management arm who had recently been hired by UBS.
Khan, who confronted at least one of the investigators tailing him in the Zurich city center, was allegedly being spied upon to ensure that he would not attempt to bring Credit Suisse clients with him when he started with UBS later in the year. The scandal deepened, however, when a contractor who worked on hiring the private investigation team following Khan committed suicide earlier this week, taking the story from the financial section to the front pages of the country's tabloid newspapers.
"The Board of Directors appreciates taking appropriate measures to protect the company's interests, including when senior employees leave the company," the bank said in a statement Tuesday. "However, the Board of Directors considers that the mandate for the observation of Iqbal Khan was wrong and disproportionate and has resulted in severe reputational damage to the bank."
Credit Suisse shares were marked 0.3% higher in Zurich trading to change hands at €12.26 each, extending their year-to-date gain to around 13.5%, while UBS was marked 0.31% higher at €11.36 each.
The revelation that Credit Suisse was comfortable hiring private investigators to monitor employees -- an action that legal sources have suggested is not unusual in the hyper-competitive market for financial services in Switzerland -- has kept the bank in the mainstream media news cycle, but also indicates a potential new challenge to Thiam's multi-year turnaround plans.
With the departure of Bouee, a close ally who worked with the CEO at both Prudential Plc and the McKinsey & Co. consultancy group, Thiam will now pair with incoming COO James Walker, an American banking veteran who has previous served as CFO of the bank's U.S. operations.