Last updated on June 5, 2023
| Investment Bank Credit Suisse (CS) has barely managed to stay afloat these past few months due to a 71% drop in market value. Luckily, the Swiss Central Bank threw them a liquidity lifeline in the form of major bank regulations. This sudden drop was the result of several years of failure in managing the company. The first shock to the company was when former Credit Suisse CEO, Tidjane Thiam, was caught hiring private contractors to spy on the wealth manager of Bank UBS, a rival company. This debacle resulted in the suicide of a private investigator as well as the resignation of many Credit Suisse executives. In attempts to mitigate problems, Ulrich Koerner, the new CEO, hoped to restore trust in the company that has been so fraught with scandals. During his tenure, he dealt with massive litigation and reimbursement costs due to the collapse of both Archegos, a hedge fund, as well as supply chain finance firm Greensill Capital. Because of these failures, Credit Suisse’s risk and compliance as well as asset management divisions underwent significant restructuring. However, corruption was soon brought to light when leaked data showed that Credit Suisse had served a list of human rights abusers, corrupt politicians, and sanctioned businessmen for decades. Later that year, Credit Suisse was found guilty of preventing a Bulgarian cocaine trafficking gang from laundering its profits through the bank between 2004 and 2008. Due to poor management and a distrusting public, Credit Suisse netted losses of 7.3 billion Swiss francs in the 2022 fiscal year. |
Complex Terms:
- Lifeline: a thing on which someone or something depends or which provides a means of escape from a difficult situation
- Litigation: the process of taking legal action
- Reimbursement: a sum paid to cover money that has been spent or lost
- Restructuring: a reorganization of a company with a view to achieving greater efficiency and profit, or to adapt to a changing market
- Trafficking: dealing or trading something illegal
- Laundering: conceal the origins of (money obtained illegally) by transfers involving foreign banks or legitimate businesses
- Francs: basic Swiss currency
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