Credit Suisse Group AG's shares underperformed the EURO STOXX Banks index by nearly 19% during the tenure of Chairman António Horta-Osório, who has resigned following an investigation into his alleged violations of COVID-19 quarantine protocols in 2021.

The bank's shares closed at CHF9.55 on Jan. 14, the last trading day before Horta-Osório's resignation was announced, unchanged from April 30, 2021, when he took over as chairman of the lender, S&P Global Market Intelligence data shows. The EURO STOXX Banks index, meanwhile, rose 18.76% over the period.

Credit Suisse's shares closed 2.26% lower Jan. 17 following news of Horta-Osório's premature departure. The Portuguese banker, who was formerly CEO of U.K.-based Lloyds Banking Group PLC, spent little more than eight months in the position, and his resignation may have reputational repercussions for the bank, which is still reeling from large losses linked to its dealings with collapsed U.S. hedge fund Archegos Capital and British specialty finance lender Greensill Capital (UK) Ltd.

Horta-Osório's untimely resignation delivers another blow to Credit Suisse's bid to repair its reputation, Maria Rivas, senior vice president of global financial institutions at DBRS Morningstar, told Market Intelligence.

The bank appointed Axel Lehmann its new chairman. A former COO at UBS Group AG, Lehmann joined Credit Suisse in October 2021 and headed the board's risk committee.

Uncertainties related to the appointment of a new chairman and implementation of the bank's Horta-Osório-led strategy could have some reputational impact on the lender, Firdaus Ibrahim, equity analyst at CFRA Research in Kuala Lumpur, Malaysia, said in an e-mail. Ibrahim, however, recognized that Lehmann's extensive experience, which includes a stint as chief risk officer at Zurich Insurance Group AG, should help Credit Suisse fix its reputation and bolster its risk management.

Strategy continues

Credit Suisse is expected to continue to implement the strategy it unveiled in November 2021, which will see it close much of its prime brokerage business that dealt with hedge funds, scale back investment banking and focus on optimizing wealth management.

At the beginning of his short stint as chairman, Horta-Osório promised a review of the bank's risk management, culture and strategy, having taken office just after the bank incurred a CHF4.43 billion loss related to Archegos. Before that, Credit Suisse was caught up in the collapse of Greensill, some losses related to which it is still seeking to recover.

"Risk management will be at the core of our actions, helping to foster a culture that reinforces the importance of accountability and responsibility," Horta-Osório said at the time of the strategy's unveiling.

With Horta-Osório gone, Citi analysts said continuity is now "a must" for Credit Suisse, Dow Jones Newswires reported. Lehmann has expressed support for the strategy his predecessor has left behind, saying the bank "will continue to embed a stronger risk culture across the firm."

Lehmann is expected to take a more traditional approach, according to Citi analysts. His immediate appointment should also provide a relatively smooth handover for the ongoing strategy, Rivas said, adding that the bank needs management stability to successfully rebuild investor confidence.

Lehmann's experience as COO of UBS is also expected to benefit Credit Suisse's wealth management strategy, according to Ibrahim.

Credit Suisse declined to provide further comments on the resignation and its strategy.

Higher revenue seen

Horta-Osório's departure came just weeks before Credit Suisse is due to release its fourth-quarter and full-year 2021 earnings.

The S&P Capital IQ median 2021 revenue estimate for the bank was CHF23.02 billion, according to 18 analysts. This is above the CHF22.39 billion of net revenues Credit Suisse reported for 2020. For the first nine months of 2021, the bank posted revenues of CHF18.11 billion, up 6% year over year from CHF17.17 billion.

Credit Suisse's investment bank, in particular, is projected to see a strong result for the fourth quarter of 2021.

"We expect [a] high level of client activity resulting in strong trading revenues as clients look to rebalance their portfolios moving into the new year," Ibrahim said. "The expected increase in interest rates should also bolster [fixed income, currency and commodities] trading revenues, in our opinion."