Credit Suisse chairman Walter Kielholz relinquished his post at Switzerland's number two bank to become chairman of troubled reinsurer Swiss Re, which has turned to Warren Buffett for cash after a hefty loss. Swiss Re chose ex-CEO and current vice chairman Kielholz less than a month after appointing an industry veteran as chief executive in a further attempt to show it wants to move away from risky investments and focus on its core business.
But as in the case of bank giant UBS, which has just replaced its top management duo to fight its biggest ever crisis, the executives were picked from the old guard of Switzerland's financial scene.
"This is not a clean break for Swiss Re," said Tim Dawson, an analyst at Helvea. "Kielholz was the person who started the move into alternative risk products. The company needs to make some major changes to restore investor confidence. I am not sure whether this goes far enough."
Hans-Ulrich Doerig, a supporter of the global bank model who is currently vice chairman at Credit Suisse, will be promoted to chairman of the bank. Together with Kielholz and Oswald Gruebel, a former Credit Suisse chairman who was appointed CEO of UBS on February 26, Doerig is the third Credit Suisse executive to make it to the top of a large Swiss financial company in less than a month.
"What is interesting to see in all these executive changes happening in Switzerland is the fact that Credit Suisse emerges as the company providing high-level managers to its financial sector peers," said Nicolas Michellod, senior analyst at Celent.
Credit Suisse is among the few global banks that has not needed government aid so far in the crisis. Kielholz will replace Swiss Re chairman Peter Forstmoser on May 1. Mathis Cabiallavetta, another banking veteran who was chairman of UBS, will become the new deputy chairman at Swiss Re.
Swiss Re had already rushed to appoint a new chief executive, Stefan Lippe, on February 12 after a disastrous foray into investment banking brought it to its knees. Writedowns and capital concerns have wiped off three-quarters of Swiss Re's market value in 2009 and the reinsurer has had to shore up its capital base with a 3 billion Swiss francs ($2.60 billion) investment from US billionaire Buffett.
Shares in Swiss Re opened higher after news of the new appointment but then fell into negative territory after investors gave a mixed reaction to Kielholz's appointment. Swiss Re was down 1.78 percent at 12.13 Swiss francs at 1230 GMT after hitting an all-time low of 11.88 francs earlier on Monday. But shares were outperforming the Dow Jones index of European insurers, which was down 4 percent.
Credit Suisse's stock was down 6 percent, slightly underperforming the Dow Jones index of European banks even as analysts praised Doerig's choice as chairman, given his experience as head of the risk committee. Credit Suisse, which has said it had a good start to 2009, has not been as badly hit by the financial crisis as UBS and Swiss Re, but still posted a record loss for 2008.
Kielholz said in a statement Swiss Re's core business was intact and its prospects excellent despite disappointing results: "I'm confident that at the Annual General Meeting, shareholders will support our proposals to strengthen the company's capital base."