One of Credit Suisse’s top executives has quit over a spying scandal

A senior executive at one of Europe’s largest banks stepped down Tuesday after an investigation found that he ordered a surveillance operation on a top banker who joined a crosstown rival.

Pierre-Olivier Bouée, the chief operating officer of Credit Suisse (CS), has resigned with immediate effect, the Swiss bank said Tuesday. The affair had caused “severe reputational damage,” it added.

Bouée admittedduring an investigation by law firm Homburger that he had asked Credit Suisse’s security chief to place Iqbal Khan, head of wealth management, under observation in late August after rival bank UBS (UBS) announced hewould be joining them. The surveillance was conducted by a licensed observation firm retained through an intermediary.

Bouée had ordered the surveillance on Khan “in order to protect the interests of the bank” and had not informed CEO Tidjane Thiam or any other member of the bank’s senior leadership, Credit Suisse said in a statement.

The executive reportedly feared that Khan would try to encourage Credit Suisse colleagues to join him at UBS. Bouée was worried that Khan posed a risk to the interests of Credit Suisse and the fact that he continued to socialize with “key employees” added to his concerns, Credit Suisse said.

Managing the assets of wealthy clients has become an even bigger focus for Swiss banks and their rivals elsewhere in Europe as they try to offset a decline in investment banking revenue and the impact of negative interest rates on lending margins.

And it is not unusual for bankers to take longstanding clients with them when they change employers. In wealth management, where bankers build close relationships with clients over many years, the battle for business is particularly fierce.

Khan was observed on seven business days between September 4 and September 17. Neither the surveillance operation, nor the Homburger investigation, found any evidence that Khan had breached his contractual obligations by trying to poach employees or clients, Credit Suisse said.

Bouée and Thiam

Credit Suisse commissioned its investigation after prosecutors in Zurich opened a case concerning potential coercion or threats following a complaint made by Khan,who reportedly confronted one of the people tailing him.

The incident on September 17 between Khan and “a member of the external observation team” was not part of the investigation as it is the subject of an ongoing criminal inquiry, the bank said.

The investigation also “did not identify any indication that the CEO had approved the observation of Iqbal Khan nor that he was aware of it prior to [September 18] after the observation had been aborted,” it added.

Bouée and Thiam worked closely together for nearly two decades, according to their Credit Suisse biographies. The pair were at McKinsey in Paris between 2000 and 2002. Bouée followed Thiam to British insurer Aviva (AIVAF) in 2004. They both joined Prudential, another British insurer, in 2008 before heading to Credit Suisse in 2015.

Credit Suisse’s head of global security has also resigned with immediate effect.

Bouée will be replaced by James Walker, a senior executive at Credit Suisse’s finance division. Khan is due to start his new job as co-head of wealth management at UBS on Tuesday.