August 22, 2018 / 2:56 AM / 2 months ago

Australia's AMP taps Credit Suisse banker to tackle regulators, restore trust

SYDNEY (Reuters) - Australia’s biggest listed wealth manager AMP (AMP.AX) hired a veteran Credit Suisse Group (CSGN.S) banker as its new CEO, tasking him with using his experience of handling regulatory crises to mend a reputation battered by misconduct allegations.

FILE PHOTO: Francesco de Ferrari, the head of Asia-Pacific private banking at Credit Suisse Group AG, speaks at the Reuters Wealth Management Summit in Singapore June 3, 2013. REUTERS/Edgar Su

AMP has been the worst hit by a quasi-judicial inquiry, or Royal Commission, into Australia’s finance sector, losing half its board and nearly A$5 billion ($3.7 billion) in market value over accusations it charged customers fees for no service and then worked at the board level to deceive a regulator about it.

The Australian financial planning titan opted against an internal candidate to fill the CEO vacancy and instead said on Wednesday it will pay A$17.7 million for the Swiss firm’s head of Asia Pacific private banking, Francesco De Ferrari, 49, on top of his salary.

“He has dealt in other jurisdictions with all the sorts of issues that the Royal Commission’s dealing with and the regulatory change that happened after the crisis, so he understands what’s possible,” AMP Chairman David Murray told Reuters by telephone.

“He takes regulation very seriously and understands how to engage with regulators on a positive basis (which) is going to be very necessary, given what’s happened at AMP, firstly, and then in the washup from the Royal Commission,” added Murray, who started in the role in June.

Murray said De Ferrari’s dealings in recent years with the U.S. Department of Justice and with Italian authorities on behalf of Credit Suisse were evidence he could navigate the 169-year-old AMP through any regulatory changes or actions that result from the Royal Commission.

REGAINING TRUST

The Royal Commission, which hands down its final report in February, has said it may recommend the government consider criminal charges against AMP, the only company it has said that about.

U.S.-born De Ferrari, an Italian-Swiss dual national, said in the statement AMP had endured a “challenging year (but) I’m confident we can earn back trust which will underpin the recovery of business performance”. De Ferrari, who spent 17 years at Credit Suisse, starts at AMP on Dec. 1.

AMP shares fell 1.6 percent by mid-afternoon, compared with a broader market decline of 0.4 percent. But since the shares began trading ex-dividend on Wednesday, the 6 Australian cent decline compared to the 24.5 cent dividend implied investors supported the appointment.

“It is a good start,” said Morgan Stanley analyst Daniel Toohey, referring to De Ferrari’s appointment. “He is relatively unknown so it’s too early to judge but AMP needs a cultural shift and he is left of field and that seems positive,” Toohey said.

AMP is currently facing multiple class-action lawsuits pursuant to findings of the inquiry, which has said it may also recommend criminal charges.

Credit Suisse announced replacements for De Ferrari on Wednesday.

“Under Francesco’s leadership, we have built a highly successful onshore and offshore private banking business model, and expanded its footprint across the region beyond established key wealth management hubs to capture the opportunities in both mature and emerging wealth markets,” the Swiss bank’s Asia Pacific CEO Helman Sitohang said in a statement.

Reporting by Byron Kaye and Paulina Duran in SYDNEY, Jennifer Hughes in HONG KONG and Susan Mathew in BENGALURU; Editing by Leslie Adler and Muralikumar Anantharaman

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