Thursday Mar 16, 2023
ZURICH: Credit Suisse continues to be mired in a string of scandals and is perceived as the "weakest link" in the Swiss banking industry as the banking behemoth's shares experienced a significant decline.
Here is an overview of the woes stalking Switzerland’s second largest bank:
The catalogue of troubles began with the 2021 collapse of Greensill, a British financial firm specialised in short-term corporate loans via a complex and opaque business model.
Greensill’s collapse threw a number of companies into difficulty, but none more than Credit Suisse, which was particularly heavily invested in the firm.
In March 2021, after Greensill declared insolvency, Credit Suisse closed four connected funds in which around $10 billion had been invested.
Swiss financial regulator Finma concluded that the bank "seriously breached its supervisory obligations" in the case, and ordered "remedial measures."
Just four weeks after the Greensill collapse, Credit Suisse was rocked by the implosion of US hedge fund Archegos, which cost the bank more than $5 billion.
In October 2021, the bank was fined $475 million by US and British authorities after it was caught up in a bribery scandal in Mozambique involving loans to state-owned companies.
The credits, granted between 2013 and 2016, were supposed to finance maritime surveillance, fishing and shipyard projects, but were partly diverted for bribes.
The bank agreed with the British authorities to cancel the $200 million owed by the country, which was plunged into a serious financial crisis.
Former Lloyds Banking Group chief Antonio Horta-Osorio was brought in as Credit Suisse chairman in April 2021, pledging to put better risk management at the heart of its culture.
But less than nine months later, he resigned after it emerged he had violated Switzerland’s Covid quarantine rules.
A media investigation published in February 2022, dubbed "Suisse Secrets", alleges that the bank held billions of dollars in dirty money for decades.
The probe, which was coordinated by the Organized Crime and Corruption Reporting Project, said leaked information on more than 18,000 bank accounts dating back to the 1940s showed Credit Suisse held more than $8 billion in the accounts of criminals, dictators and rights abusers.
The bank rejected the findings, saying they were "based on partial, inaccurate, or selective information taken out of context."
At the end of March 2022, a Bermuda judge ruled that former Georgian prime minister Bidzina Ivanishvili suffered a loss of $553 million due to failures by Credit Suisse Life Bermuda, a Credit Suisse affiliate, to fulfil its fiduciary duty.
The case stemmed from the actions of Patrice Lescaudron, a former star banker at Credit Suisse who was sentenced by Swiss authorities to five years in prison in 2018 on charges of fraud and forgery. Lescaudron died by suicide in 2020.
The court found that the Credit Suisse affiliate did not prevent the fraud because "it was prioritising the revenues Mr Lescaudron generated for Credit Suisse over the interests of its clients."
In June 2022, Credit Suisse was slapped with a $2 million fine in a money laundering case linked to a Bulgarian cocaine network.
Switzerland’s Federal Criminal Court found that the bank failed to take steps to prevent money laundering by the criminal organisation, deeming it guilty of breaching its corporate responsibility.
A former employee was found guilty of aggravated money laundering over a number of transactions she had conducted or ordered to be conducted between July 2007 and December 2008, despite firm indications that the funds had criminal origins.
Her actions allowed the criminal gang to stash more than 19 million Swiss francs out of reach of the authorities.
In October 2022, Credit Suisse said it would pay $495 million to settle a row with the US state of New Jersey over mortgage-backed securities dating back to the 2008 financial crisis.
In France that same month, it agreed to pay 238 million euros to avoid prosecution on money laundering and tax fraud charges brought in 2016 over undeclared accounts held by French nationals.
Credit Suisse was forced to postpone its annual report, which had been scheduled to be published last week, after a last-minute call from the US Securities and Exchange Commission over revisions made to cash-flow statements for 2019 and 2020.
When it finally released the report on Tuesday, it acknowledged "material weaknesses" in its internal controls."
Following fears of contagion from the collapse of two US banks last week, comments from Credit Suisse’s main shareholder that it would not invest more money in the bank sparked market panic.