Switzerland's second-biggest bank has made an abrupt change to its trading unit following almost $1 billion in write-downs on illiquid trades earlier this year. The Swiss bank promoted an investment banker who led the unit responsible for at least $261 million of those losses. The appointment raises a series of questions.

Wednesday's ouster of the Credit Suisse global markets head Tim O’Hara came suddenly, but not unexpectedly at all.

The American investment banker suffered a major setback in March, when the bank kissed goodbye to more than $1 billion of in the value of illiquid securities.

Acerbic Sendoff

Thiam’s sendoff for the 52-year-old veteran CS equities and fixed income specialist ended on an acerbic note: «I am confident that these management changes that I have proposed and that have been approved by the board of directors of Credit Suisse Group AG will drive a continued improvement in the performance of our bank.»

O’Hara makes room for Brian Chin, a 39-year-old managing director in New York.

Blank Slate

Chin is a virtually blank slate for investors even though he has been with the bank since 2003, save for a 2012 fundraising push – full of spelling and grammar mistakes – on behalf of presidential candidate Mitt Romney.

His most recent job was running Credit Suisse’s securitized product unit, which was merged into a larger credit unit when Thiam stepped up his strategy for scaling back the unit in March.

Familiar With Loss-Making Inventory

Chin is very familiar with how CS accounted for its securitized products, according to a report from investment banking portal IFR – one of the units where CS had racked up massive illiquid positions.

The unit put under Chin's co-management in March was at the heart of a series of embarrassing blunders for Thiam: he initially said that some traders had breached limits set by the bank, a claim he was quickly forced to row back on when his chairman publicly contradicted him.

Thiam also called for a cultural change at CS following the losses, threatening consequences for those responsible and deeming their behavior «unacceptable».

Thiam's Consequences?

He declined to name names, and it is unclear if any CS bankers – besides eventually O’Hara – faced any consequences.

Chin certainly did not: together with David Miller, he was named co-head of a newly merged credit division within O’Hara’s global markets unit. In this position, the two reported directly to O’Hara until this week.

As for co-head Miller, the structured products unit he led at the time caused even larger write-downs than Chin's.

The long-time investment banker has a colorful past: he is the architect of a Credit Suisse product called a dividend capitalization loan.

Loans Blew Up

The sophisticated product was aimed at major real estate developers who would borrow based on inflation values of their property projects, then reap millions in dividends while risk was passed on to new investors organized by the Swiss bank.

Credit Suisse lined up more than $5 million of these loans in exclusive projects, such Idaho’s Tamarack resort and a Lake Las Vegas golf plan. The loans eventually blew up, investors lost billions and – predictably – sued the bank.

The bank will name a new co-head of credit alongside Miller following Chin's promotion to the top job, a spokeswoman said.

Wrong Signal

Miller’s promotion to another big job at Credit Suisse in March sent precisely the wrong signal about what behaviors Wall Street banks acknowledge and reward, renowned business author William D. Cohan wrote for the «New York Times» in June.

IFR also openly questioned the appointment of Chin and Miller in March, saying it had confounded observers. finews.ch also asked Credit Suisse what led to their promotion. The bank declined to elaborate beyond its statement.

Chin has now been skyrocketed into the Swiss bank’s top management echelon in place of O’Hara, where he leads 11,620 staff – a career move virtually unparalleled in recent Swiss banking history.