Credit Suisse's fall: Tale of scandals and poor choices
Credit Suisse, the once formidable investment banking giant, is all set to be acquired by its long-time rival UBS. The Switzerland-based lender has been struggling for a while, and the UBS takeover is the culmination of multiple scandals. In the latest, reports revealed its senior executives were allegedly enjoying a winter retreat in the Alps while the bank was staring at an imminent collapse.
Why does this story matter?
- Interestingly, Credit Suisse was one of the few banks that did not accept a bailout after the 2008 global financial crisis. On the other hand, UBS did.
- The tables have turned now, and the Swiss lender has only itself to blame for its predicament. The collapse of US banks may have played a hand, but Credit Suisse's troubles were mainly its own creation.
Credit Suisse has sponsored Swiss Alps racing event since 1976
An international horse-racing event in the Swiss resort town of St. Moritz is known for racing on a frozen lake among the stunning Alps mountains. Dubbed White Turf, it has been sponsored by Credit Suisse since 1976. This year's event saw its chairman Axel P Lehmann, CFO Dixit Joshi, and other top executives at the venue. But what's unusual about that, you might wonder?
Executives were in Alps when bank was struggling
There is nothing wrong with Credit Suisse's top brass attending an event sponsored by them, especially when it is in the Alps. However, if the said event took place last month, there is a problem. And that's exactly what happened. The bank's senior executives had a good time while it was struggling with falling share prices.
Credit Suisse involved in multiple scandals
Scandals and management oversight are nothing new for Credit Suisse, though. The bank has been involved in multiple scandals, including bribery, drug offenses, spying, and criminal trial, among others. The lender's latest series of scandals began in 2019 when then-CEO Tidhane Thiam and wealth management boss Iqbal Khan nearly threw their hands at each other during a dinner party.
Bank spied on former wealth management head
Khan later quit the bank and joined UBS, and now heads its wealth management. After Khan quit, however, Credit Suisse hired a private security firm to keep tabs on him. This was later found out by Khan, too. But the lender's scandals do not end there. In the 2021 Greensill collapse, the Swiss financial regulator found the bank also seriously breached its supervisory obligations.
Fined multiple times for money laundering
Credit Suisse's chequered past also involves some criminal misdoings as well. During 2012-16, the lender bribed Mozambique officials. The bank was also fined $475 million by the US and British authorities for this. In June 2022, it received another fine for being involved in a money laundering case concerning the Bulgarian cocaine network. Moreover, there were allegations that Credit Suisse kept dirty money, too.
