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Grübel makes perfect exit as Dougan reaches summit

Oswald Grübel astonished the financial markets this week by announcing his retirement as chief executive of Credit Suisse Group, making way for investment banking CEO Brady Dougan.

Grübel's retirement, earlier than expected, enables him to leave Credit Suisse on a high, after completing the divestment of the Winterthur insurance business and integrating Credit Suisse First Boston fully into the bank.

The announcement yesterday (Thursday) coincided with Credit Suisse's announcement of record profits for 2006, which also surprised analysts. Full year net earnings almost doubled, up 94% at Sfr11.3bn ($9.3bn), although this included a net capital gain of Sfr1.8bn ($1.4bn) from the sale of Winterthur to Axa. But if Grübel has managed to end his 37 year stint at the bank on a career peak, this is no less remarkable a moment for Brady Dougan.

Three years ago, no observer of the banking industry would have considered him a potential candidate for CEO of Credit Suisse.

Dougan had risen rapidly through derivatives, debt and equity jobs since joining the bank in 1990, but his career stalled during John Mack's controversial two year reign as co-CEO of Credit Suisse, with Grübel, from 2003 to 2004.

Having been out of favour during the Mack years and exiled to a marginal job in London, Dougan came back into the fold as CEO of investment banking when Mack left in July 2004. Since then he has impressed many, inside and outside the bank.

"He transformed the investment bank and he's the most rounded individual in terms of who the candidates are to succeed Ossie," said a senior Credit Suisse banker in London. "We have these record earnings, we've beaten the targets, our stock's up, UBS's stock is down — it's a perfect time to be making that transition."

Dougan has leapfrogged other candidates such as Walter Berchtold, CEO of private banking.

Forty-seven year old Dougan's swift rise seems all the more impressive because he is an American, taking sole control of a Swiss bank. It is still extremely rare for any major bank, anywhere in the world, to be run by someone who is not a citizen of its home country.

Yet it is less surprising that this has happened at Credit Suisse, which, of all the European banks that bought US securities firms, has been most changed by the experience. Credit Suisse First Boston has been run by Americans for years — Jack Hennessy, Allen Wheat, John Mack and then Dougan. And Grübel himself is German.

Grübel's nomination of Dougan — an old colleague of Wheat's — to lead CSFB in 2004 was itself seen as an interesting choice. Dougan was given three years to double the investment bank's profit, which had been Sfr1.2bn in 2003. This week, the investment bank declared earnings of Sfr2.34bn.

The turnaround after John Mack's reign allowed the 63 year old Grübel to declare on a conference call this week: "I'm retiring because my work is done. I came back in 2002 when we had a job to return the company to profitability."

Grübel joined Credit Suisse White Weld from Deutsche Bank in 1970 as a bond trader and became CEO of the firm in 1978. He was appointed to the board of Credit Suisse in 1991 and held various CEO positions within the bank before becoming co-CEO with John Mack in 2003.

Grübel's departure will take effect at the bank's AGM on May 4.

Paul Calello, CEO for Asia Pacific, will take over Dougan's job as head of investment banking. Calello will remain responsible for Asia until a successor can be chosen.

Meanwhile, Robert Shafir, former global head of equities at Lehman Brothers, will join Credit Suisse to run investment banking in the Americas.

Dougan and Calello both joined Credit Suisse in 1990. Dougan began by building the derivatives desk, before becoming co-head of global debt capital markets in 1994.

He then took over the equities division, taking it into profit before becoming co-head of investment banking and equities with Charles Ward in 2000 and co-president of institutional securities with Brian Finn in 2002.

Calello, also originally a derivatives man, became Asia chief in 2002. Before that he had run various parts of Credit Suisse's derivatives business in London, New York and Tokyo, ending up as head of equity derivatives and convertibles.

Credit Suisse's Sfr2.34bn profit from its investment banking arm in 2006 was more than double analyst forecasts and an eightfold year-on-year increase.

Chris Dammers


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