Credit Suisse is one of Europe's most prestigious banks, offering a range of high-end financial services. However, it has struggled in the past few years as a result of downturns in investment trading and a series of fines for malpractice, including aiding tax evasion, mortgage mis-selling, exchange rate fixing and other "bad behaviour" issues. Credit Suisse was not alone among banks in its dabbling in these areas, but the scandal which exploded in 2019 was rather more unique. Following the defection to arch-rival UBS of the Credit Suisse's head of wealth management mid-year, the bank hired a security firm to spy on the departing executive. The contractor conducting surveillance was spotted by his target and arrested, and later committed suicide. The resulting scandal led to the resignation of, first, Credit Suisse's COO and then also of CEO Tidjane Thiam at the beginning of 2020. He was replaced by Thomas Gottstein, previously head of the group's domestic operations. Yet another embarrassment came in 2021 when the bank was left on the hook for $4.7bn following the collapse of two investment firms, Archegos Capital and Greensill Capital, that it had backed. That resulted in the dismissal of Credit Suisse's chief risk officer and its head of investment banking. The bank's domestic division, known as the Swiss Universal Bank, is still the group's single biggest division by both revenues and operating income. However, Credit Suisse also has long-established roots in the US, not least through a partnership with US investment bank First Boston, initiated in the late 1970s, and culminating in a takeover of the American firm 20 years later. The investment banking business traded for several years under the name Credit Suisse First Boston. A traditional retail banking service remains in Switzerland, but other mass-market financial services have largely been divested. Insurance arm Winterthur was sold in 2006 to Axa after several years of poor performance, and the First Boston brand dropped following a series of trading scandals. Widespread restructuring mid-decade meant that an already slimmed-down Credit Suisse was better prepared than competitors such as UBS for the global financial crisis of 2008/09. Unlike many European rivals it required no government bailout funds. However, it took the decision in 2015 to reduce its exposure to investment banking and focus mainly on wealth management. Huge restructuring and impairment charges associated with that strategy as well as regulatory fines generated huge net losses in 2015; there was another loss in 2016 prompted by a downturn in trading; and then a third in 2017 as a result of US tax reforms as well as fines for malpractice. Performance has recovered since then. Revenues for 2020 were approx $23.8bn (SFr 22.4bn), and the bank reported a net profit of approx $2.8bn.
Capsule checked 9th April 2020
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Adbrands Weekly Update 5th Jan 2017: The year ended with yet more deals and lawsuits between US regulators and European banks in connection with the mis-selling of mortgage securities in the run-up to the 2008 financial crisis. Deutsche Bank managed to negotiate down a potentially catastrophic $14bn fine to a still-damaging $7.2bn. Of this, $3.1bn will be paid in cash, and the remainder is to be reflected in loan discounts and other forms of financial assistance to US homeowners. At the same time, a separate settlement of $5.2bn was agreed with Credit Suisse, to be split along separate lines between penalty payment and consumer relief. However, no such deal has been reached with Barclays despite months of talks. As a result, the Justice Department has issued a lawsuit against the British bank and two former employees for selling more than $31bn of mortgage-back securities to investors between 2005 and 2007 despite knowing the loans involved had material defects.
Adbrands Weekly Update 12th Mar 2015: Credit Suisse announced the departure later this year of CEO Brady Dougan. He will be replaced by Tidjane Thiam, currently head of UK insurer Prudential, who will in turn be succeeded by Mike Wells, head of its US division Jackson Life.
Adbrands Weekly Update 22nd May 2014: Credit Suisse became the first bank for more than a decade to plead guilty to criminal charges in the US, admitting it helped wealthy American clients conceal assets in offshore accounts in order to avoid tax. It agreed to pay a fine of $2.6bn to settle the long-running investigation by US regulators. According to US Attorney General Eric Holder "This conspiracy spanned decades. Credit Suisse not only knew about this illegal, cross-border banking activity; they willfully aided and abetted it. Hundreds of Credit Suisse employees, including at the manager level, conspired to help tax cheats dodge US taxes."
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