"McKinsey & Co has a long history of ruining Credit Suisse"
So, Credit Suisse is thinking of bringing the consultants back? I would strongly advise against engaging McKinsey & Co. Quite aside from McKinsey’s self-inflicted reputational disasters (remember Rajat Gupta?), McKinsey has a long history of ruining Credit Suisse.
Those of us with long memories will recall Lukas Mühlemann. He was the ex-Credit Suisse CEO who spent 12 years with McKinsey & Co. Mühlemann ran McKinsey & Co. Switzerland before joining Credit Suisse as CEO in 1997.
Mühlemann embarked upon an expansion strategy that included the acquisition of Winterthur Insurance for $8.8bn in 1997 and Donaldson, Lufkin and Jenrette for $11.5bn in 2000. However, after a series of losses and a halving of the share price, Mühleman was forced out in 2002. Winterthur was later sold to Axa.
This should have been sufficient to warn Credit Suisse that McKinsey people know less than they claim to. But the bank then hired Tidjane Thiam, another McKinsey Consultant as CEO in 2015, and Thiam promptly appointed other ex-McKinsey people like Pierre-Olivier Bouée as COO. Both were ultimately forced out, but not before Thiam had made the fateful move of appointing the inexperienced Lara Warner as chief risk and compliance officer.
McKinsey people therefore carry some of the blame for the situation Credit Suisse finds itself in. For McKinsey to come in and fix the merger with UBS would be a great irony.
Ralph Hamers is too young and inexperienced to know the game, but bringing in the consultants is a common ploy. Sergio Ermotti is simply covering himself. If you go out and hire the most expensive consultants you can find, you simply tell the board: “I did everything I could—look, I hired McKinsey—how can that be wrong? Everyone else does it.”
But if Sergio really knew what he was doing, he wouldn't need consultants at all. And he especially would not need them from McKinsey.
Ralph Tangemann is a pseudonym
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