Credit Suisse CEO Tidjane Thiam is in a desperate situation. It's time to revive the idea of splitting the Suisse from the Credit, finews.com finds – the option isn't as unlikely as it sounds. 

Tidjane Thiam and Switzerland: that's irreparable. The Credit Suisse CEO has lost his credibility at home due to the extensively documented «spygate» scandal. Amid the barrage of media coverage, the 57-year-old is fighting not just for his job but also for his dignity.

It's entirely possible that Credit Suisse's board decides to put an end to Thiam's tenure as CEO when it meets this week. It's equally possible that Credit Suisse's key investors stick up for him.

Relationship Ruptured

Even if this is the case – Thiam won't be able to rid himself of the tawdry scandal, especially at home, and his relationship to domestic shareholders will remain ruptured: an impossible situation for the CEO of Switzerland's second-largest bank.

In either case, Credit Suisse needs a radical step – and that could be carving out its Swiss entity. A partial listing of Credit Suisse Switzerland in order to nourish the group's severely weakened capital is, of course, a path Thiam himself laid out in 2015 and pursued with enormous vigor by the bank until blowing it off two years later.

Countless Advantages

To carry out the move effectively, the home market business would have to be severed entirely from the internationally-focused ideas in wealth management and investment banking.

It would be a complex and certainly controversial plan – with some advantages, as finews.com argues. Firstly, Thiam could remain CEO of the parent group, which in turn could position itself as a nimble global bank with meaningful wealth and capital markets arms – a concession to his strategic interests.

Far Less Complexity

Not only those: the French-Ivorian executive is perceptibly more comfortable talking big-picture issues with the intelligentsia as well as business and political elite than he is at close range with Swiss banking and client minutiae. 

It would simply take him out of the firing line – from hostility related to his controversial and deeply unpopular management style as well as from racism-tinged sentiment.

A Credit Suisse Group, entirely internationally geared, would be considerably less complex in regulatory terms – and no longer systemically relevant in Switzerland. Its strategic direction would be clearer, and its «growth narrative» far easier to convey to shareholders.

Investing in Growth

Another pleasant effect of carving out Switzerland: Credit Suisse Group would lose a huge legacy issue. The Swiss bank's modernization and upgrade of its somewhat antiquated technology framework will absorb millions in coming years – and capital is precious. Thiam may find it strategically more sensible to pour funds into growth than into a Swiss market with limited prospects.

An independent Credit Suisse in Switzerland would also win strategic flexibility, a weighty advantage given the three-digit million resources needed to build a domestic digital push.

Bank With Fewer Conflicts

The unit could operate from a position of strength in the Swiss market – without detouring into infighting at the parent company over capital and resources. The absence of a permanent conflict of interest inherent in being global trading bank would be a huge advantage for winning and keeping clients.

With a tried and tested as well as hugely predictable business model, Credit Suisse Switzerland would easily find favor with investors. Any carve-out would be hugely complex, as anyone on the job from October 2016 to April 2017 can attest. Legal and regulatory requirements have broken the ground – but Credit Suisse Switzerland is still tightly enmeshed, particularly for trading and asset management.

How Likely a Plan?

Instead of a minority stake as the Swiss bank planned five years ago, Credit Suisse would have to float a majority of the domestic unit in order to ensure a clear regulatory demarcation between the two potential firms.

Besides the uncertainty of whether Credit Suisse investors would support the bank in such a move, the question is how likely a Swiss spin-off is. A spokesman for Credit Suisse didn't comment on the idea.

Thiam Friendly vs Plan

The Swiss bank's board will mainly decide on Tuesday under which conditions Thiam remains in the job – or doesn't. Internally, the CEO has always been appreciative of the Swiss unit, which reliably delivers profits.

That doesn't mean that he wouldn't welcome being free of it – especially if it favored his strategic plans and afforded him freedom. Chairman Urs Rohner also outlined a Swiss carve-out several years ago. Whichever form reinvention takes, Credit Suisse is ripe for a new beginning.