Credit Suisse’s timeline of misfortune
Credit Suisse is on the verge of being taken over by its Swiss rival UBS having suffered a bruising few years in which the bank has stumbled from one crisis to another. From “tuna bonds” to Greensill, Morning Wire looks back at the series of scandals which have brought the 167-year old lender to the verge of collapse.
2019 – Corporate espionage
The bank hired private detectives to track two outgoing executives, including one who left to join rival bank UBS, triggering a regulatory investigation and the departure of then CEO Tidjane Thiam in 2020. Regulators also accused the bank of lying about the scale of the espionage.
2020 – Bulgarian money laundering
Swiss courts found Credit Suisse guilty of failing to run proper checks on clients and investigate the source of funds linked to a Bulgarian drug ring that laundered at least $146m between 2004 and 2008. The court found that the bank missed clear red flags such as the funds being stuffed in suitcases and two assassinations linked to a client.
2021 – Archegos Capital
The bank faced a $5.5bn loss due to its exposure to the US hedge fund Archegos Capital Management which collapsed in early 2021. A report published soon after blamed the losses on poor risk management practices and a “lack of accountability”.
2021 – Greensill Capital
Credit Suisse was forced to suspend $10bn of investor funds after the collapse of supply-chain financing Greensill Capital whose loans were packaged and sold to Credit Suisse clients. Senior executives overruled risk managers to approve a $160m loan to Greensill which the finance company said there was “no conceivable way” to pay when it collapsed.
2021 – Tuna bonds scandal
The bank faced a $4750m fine for its role in the “tuna bonds” loan bribery scandal. In the scandal funds raised through debt issuance were spent on purchasing military equipment instead of being used to invest in a tuna-fishing fleet in Mozambique. The loans were not revealed to creditors and the International Monetary Fund, triggering a crisis in Mozambique, the country where the funds were supposed to be invested. Credit Suisse is set to face a 13-week trial in September 2023.
January 2022 – Chair resigns
António Horta-Osório resigned as Credit Suisse chair in January after breaking Covid quarantine rules in both Switzerland and the UK. Horta-Osório, who was brought in to reform the company’s culture, attended Wimbledon and the final of the men’s European championship on the same day. It was reported he also used the company’s private jet excessively.
March 2023 – Sell-off sparked
The latest sell-off in Credit Suisse was prompted by two stories last week. The first that it had found “material weaknesses” in its financial reporting. The next day, the bank’s largest shareholder, the Saudi National Bank, said it would “absolutely not” invest more capital if requested, although it also said Credit Suisse did not need any more funds. That day Credit Suisse’s share price tanked 30 per cent forcing the Swiss national bank to intervene.