Mission Possible

Credit Suisse estimates quarterly profits and fires its CEO

The Swiss bank Credit Suisse Group will acquire a new manager, transferring the post of executive director to a younger specialist. The bank's current CEO, Oswald Grübel, who recently turned 63, will step down in May this year after delivering outstanding quarterly results. “I am leaving because my mission is completed. We made the company profitable again,” he said at a press conference yesterday.

His place will be taken by the current head of the investment division of Credit Suisse, 47-year-old Brady Dugan (pictured) .

Real miracles are expected from the new manager at the bank. Over the past few years, Mr. Dugan has managed to make his division the most profitable in the Swiss financial group. Investment income has almost tripled since 2004, from $1.6 billion to $4.8 billion. The division's annual results significantly exceeded analysts' expectations. Pre-tax profit from investments rose to 1.89 billion (according to forecast - $730 million) from $231 million a year earlier. Experts also assessed his candidacy as unequivocally positive. “Brady Dugan was truly the best candidate they could find within the bank,” said Florian Esterer, fund manager at Swisscanto Asset Management. “Of course, he is not as strong in character as Gruebel, but he is certainly capable of bringing revitalization to the work of the company.”

Over the past few years, Mr. Gruebel has indeed managed to return the bank to profit after a series of unprofitable years since 2000. Now the second largest bank in Switzerland has achieved strong results, showing enviable financial performance. Between October and December, its net income quadrupled to $3.8 billion. Analysts said the strong quarterly jump was due to strong securities trading activity and the sale of some assets. Credit Suisse made an extra $1.4 billion last year by parting ways with its insurance division, Winterthut. In the fourth quarter, he organized a record-breaking IPO of the Chinese Industrial &amp ; Commercial Bank of China worth $22 billion. In the fourth quarter alone, the value of the bank's shares increased by 27%.

Economist Patrick Lemmens from ABN Amro believes it was Mr Dugan who reversed the negative trends in the division. Largely due to the well-established work on managing the assets of wealthy clients, the bank's net profit increased by 15% and reached $655 million, while profits from other types of financial activities did not grow as noticeably. For example, income from consumer lending rose only 3.5% to $268 million.

On Thursday, Credit Suisse shares traded 3.4% higher at $74 per share. Bloomberg analysts believe that rising profits and stock prices have brought the Swiss bank closer to its closest competitors UBS AG and Goldman Sachs Group Inc., from which it has lagged significantly over the past decade. At the end of 2006, Credit Suisse Group's net profit increased by 94%, to $9.11 billion (compared to $4.7 billion a year earlier), and revenue by 27%, to $31.03 billion.

Denis UVAROV