The Chief Operating Officer of Credit Suisse has stepped down after he organized an "inappropriate surveillance operation" on a former colleague.

Pierre-Olivier Bouee resigned as COO after an internal probe conducted by Credit Suisse found he alone ordered detectives to spy on Iqbal Khan, who used to be the bank's former wealth management head.

"The Board of Directors considers that the mandate for the observation of Iqbal Khan was wrong and disproportionate and has resulted in severe reputational damage to the bank," Credit Suisse said in a statement.

One of the private investigators who played a part in the survellience on Khan committed suicide last week, a lawyer for the security firm involved told Reuters. 

The investigator worked as a middleman between Switzerland's second-biggest bank and Investigo, a security firm he hired to follow Khan. 

Credit Suisse Chairman Urs Rohner expressed the firm's condolscences and regret over the man's death.

"It is with great sadness and concern that we have learned of the tragic death of an external security expert, who worked for Credit Suisse," he said.

Zurich prosecutors have opened an investigation into spying incident but are not treating the death as suspicious. The investigator has not been named.

Credit Suisse launched its own internal investigation to discover what led to a confrontation in September between Kahn, who left for rivals UBS, and Chief Executive Tidjane Thiam.

Kahn was under surveillance by private detectives for seven working days between September 4 and 17, before he spotted them.

The inquiry, led by Homburger law firm, found Bouee was observing Kahn to see if he was trying to poach the bank's staff to join him at UBS. Thiam was found to be not involved and cleared.

No evidence was found suggesting that Kahn was attempting to lure staff away from the bank either. It also did not reveal any proof that the surveillance was related to the personal differences between Khan and Thiam.

Credit Suisse Chairman Urs Rohner said Thiam still had the full confidence of the board. "We have absolutely zero evidence that he was informed about it," he said.

Rohner also apologized to Kahn for the scandal saying the company "do not condone personal surveillance on employees."

Rohner and John Tiner, head of the board's audit committee, said the incident was unusual in a press conference held by the bank before saying they wanted Thiam to stay unless it was shown he had broke the law.

Credit Suisse have named James Walker as COO to replace Bouee.