China cuts rates as economy slows; Credit Suisse chairman resigns over Covid-19 breaches – business live

Credit Suisse is proving to be “something of a graveyard” for the reputations of once high-flying international financiers, says Peter Thal Larsen of Breakingviews.

The Swiss bank announced on Monday that Chair António Horta-Osório had stepped down following a board investigation. It’s been less than a year since he arrived to stabilise the lender still reeling from the ousting of former chief executive Tidjane Thiam. New broom Axel Lehmann, a former UBS bigwig, has to hope his reputation is more durable.

Credit Suisse appeared to have scored a bit of a coup last year when it recruited Horta-Osório, who had led the turnaround of Britain’s Lloyds Banking Group following the financial crisis. The Portuguese banker made an immediate impact following his arrival in Zurich, settling a Mozambican scandal, drawing a line under the spying saga that toppled Tidjane, and unveiling a new strategy to shift capital from investment banking to wealth management.

Yet Horta-Osório’s personal conduct appears to have fallen short of the high standards he set for the bank. Early in December he admitted to “unintentionally” breaching Switzerland’s Covid-19 quarantine rules. An internal investigation subsequently found that he had also broken British rules when attending the Wimbledon tennis finals in July, Reuters reported last month. That was hard to square with his desire to improve Credit Suisse’s culture and focus on “personal responsibility and accountability”.

Peter Thal Larsen
(@peter_tl)

Hoo boy. That’s a very costly quarantine-busting trip to Wimbledon. pic.twitter.com/rN3Cs3wYKo

January 16, 2022

Antonio Horta-Osório, who is well-known in the UK following his time running Lloyds Banking Group, says:

“I have worked hard to return Credit Suisse to a successful course, and I am proud of what we have achieved together in my short time at the bank. Credit Suisse’s strategic realignment will provide for a clear focus on strengthening, simplifying and investing for growth. I am convinced that Credit Suisse is well positioned today and on the right track for the future.

I regret that a number of my personal actions have led to difficulties for the bank and compromised my ability to represent the bank internally and externally.

I therefore believe that my resignation is in the interest of the bank and its stakeholders at this crucial time. I wish my colleagues at Credit Suisse every success for the future.”

Big news in the banking sector this morning: Credit Suisse chairman Antonio Horta-Osório has quit following an internal probe into his personal conduct, following breaches of Covid-19 rules.

Credit Suisse announced that Horta-Osório had resigned after a board investigation, after it emerged he had broken British quarantine rules to attend the Wimbledon tennis finals in London last July.

The Portuguese banker had flown in from Switzerland, which had been on the UK government’s amber list of countries that required arrivals to isolate for 10 days.

Horta-Osório had also admitted breaching Covid rules in Switzerland at the end of November, having flown out of the country within three days of arriving on 28 November, despite being required to quarantine for 10 days.

It’s an embarrassing blow to the embattled lender, which had appointed Horta-Osório less than a year ago.

Credit Suisse incurred heavy losses from the implosion of the Archegos investment fund last year, and also provided funding to the now-collapsed supply chain finance firm Greensill Capital.

Credit Suisse has now appointed board member Axel Lehmann chair, as it tries to recover from this string of scandals.

Severin Schwan, Vice-Chairman and Lead Independent Director of the Board of Credit Suisse, said:

“We respect António’s decision and owe him considerable thanks for his leadership in defining the new strategy, which we will continue to implement over the coming months and years.

Axel Lehmann as the new Chairman, with his extensive international and Swiss industry experience, is ideally suited to drive forward the strategic and cultural transformation of the bank. We wish Axel every success in his new role and António all the best for the future.”

Reuters
(@Reuters)

Credit Suisse chairman quits over COVID-19 breaches in latest setback https://t.co/ofbDGS8VYU pic.twitter.com/0VagOL3uUW

January 17, 2022

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

China’s economy slowed at the end of last year as the Covid-19 pandemic and the crisis in its property sector hit growth– prompting Beijing to cut a key interest rate.

China’s GDP expanded by 4% year-on-year in October-December, data from the National Bureau of Statistics shows – which is the weakest expansion in 18 months.

For 2021 as a whole, China’s economy expanded by 8.1% – the fastest in a decade – as it recovered from the slump in activity at the start of 2020.

CGTN Graphics
(@CGTNGraphics)

#China‘s #GDP grows 8.1% in 2021, fastest in 10 yearshttps://t.co/1wqw9kmuJ9 pic.twitter.com/Uu1Et0lFSf

January 17, 2022

But there are clear signs of a slowdown at the end of the year, as China’s government introduced new restrictions to combat the latest wave of Covid-19.

Retail sales growth slowing sharply to just 1.7% year-on-year in December, down from 3.9%.

Spillovers from the crisis at indebted property developer Evergrande also weighed on China’s economy.

And in response, China’s central bank has cut its key interest rate for the first time in almost two years to help bolster the economy.

The People’s Bank of China has lowered the rate at which it provides one-year loans to banks by 10 basis points — the first reduction since April 2020.

Louis Kuijs, head of Asia economics at Oxford Economics, says:

“Consumption remains the weakest link in China’s growth story at the moment and that will by and large continue for much of this year,” said

“We think Beijing has a bottom line of around 5%. As is the case at the moment, if growth is weaker than that, they’d feel strongly motivated to pursue more policy easing.”

Vincent Lee
(@Rover829)

Bloomberg: China’s economic growth weakened last quarter in the face ofslow private spending, a property market crisis and virus outbreaks, giving the central bank cause to cut its key interest rate for the first time in almost two years. https://t.co/YYQb97JJJi

January 17, 2022

China’s president Xi Jinping will be speaking later today, as part of the Davos Agenda series organised by the World Economic Forum (as the usual Annual Meeting has been postponed again due to the pandemic).

We’ll also get the results of Scotland’s largest-ever auction of permits to construct offshore windfarms, which could raise up to £860m.

The agenda:

• 10am GMT: Scottish auction for offshore windfarm permits results
• 10am GMT: Special Address by Xi Jinping, President of the People’s Republic of China, at Davos Agenda
• 11am GMT: ILO publishes new analysis of labour market and social trends, and impact of Covid-19
• 3pm GMT: Special Address by Narendra Modi, Prime Minister of India, at Davos Agenda
• 4.30pm GMT: Special Address by António Guterres, Secretary-General, United Nations, at Davos Agenda