Credit Suisse Is No More. What Went Wrong? (2024)

FAQs

What has caused Credit Suisse to fail? ›

Shakeups of Credit Suisse's board, particularly in the aftermath of the Greensill and Archegos scandals, led to a loss of institutional knowledge at the lender. This left Credit Suisse's board unable to find long-term solutions to its shortcomings, leading to a “poor risk culture” inside the institution.

Owing to the inadequate implementation of its strategic focus areas, repeated scandals and management errors, Credit Suisse lost the confidence of its clients, investors and the markets. The resulting high level of withdrawals of client funds led to the risk of immediate insolvency in mid-March 2023.

Credit Suisse faced numerous scandals in recent years, including a spying scandal, the collapse of two investment funds in which the bank was heavily involved, and a rotating group of executives.

1. What went wrong? Credit Suisse's failings included a criminal conviction for allowing drug dealers to launder money in Bulgaria, entanglement in a Mozambique corruption case, a spying scandal involving a former employee and an executive and a massive leak of client data to the media.

ZURICH, July 5 (Reuters) - Credit Suisse's collapse was caused by the bank's management, not by Swiss financial authorities, Swiss National Bank Chairman Thomas Jordan was quoted as saying on Friday.

A year after the failure of Credit Suisse, the Swiss government says UBS may have to find as much as $27 billion to absorb potential losses and protect taxpayers from ever having to bail out a major bank.

The company has been plagued by a series of missteps and compliance failures in recent years that cost it billions and led to several overhauls of top management. And over the past decade, the Swiss bank has been hit with fines and penalties related to tax evasion, misplaced bets and other issues.

Shareholders led by Gregory Stevenson and Nicole Lawtone-Bowles said Credit Suisse's "corrupt culture" and materially deficient internal controls led to an "endless train" of scandals and investigations, and more than $30 billion of losses, write-offs and regulatory penalties.

Credit Suisse was the only Swiss bank to be awarded an "A+" rating for SSL encryption*, website, and mobile security.

On 19 March 2023, fellow Swiss bank group UBS agreed to buy Credit Suisse for more than US$3 billion.

Is Credit Suisse recovering? ›

The markets took all these developments in their stride. After the initial 19% drop last year, as described above, the AT1 index has begun its march tighter, with the latest value sitting at 183. In short, we are back to pre-crisis levels and have added another 3% on top of that.

The name 'UBS' came from one of our predecessor firms - the Union Bank of Switzerland. However, just like other prominent brands which used to be an abbreviation of a company name, UBS is no longer considered an acronym.

Switzerland faced a full-scale bank run if Credit Suisse went bankrupt, Swiss regulator argues. Allowing the bankruptcy of troubled lender Credit Suisse would have crippled Switzerland's economy and financial center and likely resulted in deposit runs at other banks, Swiss regulator FINMA said Wednesday.

Credit Suisse has said it found “material weaknesses” in its financial reporting controls and that clients were still withdrawing cash, the latest blow to the Swiss bank as it tries to recover from a string of scandals.

There were two reasons for this: First, in the extremely fragile environment at the time, it could have triggered an international financial crisis with massive repercussions for Switzerland as a business location and financial centre. Second, client confidence in Credit Suisse had been severely eroded.

Credit Suisse suffered the largest loss of $5.5 billion. According to the PRA, Credit Suisse' risk management oversight and practices were “symptomatic of an unsound risk culture within the business line that failed to balance considerations of risk against commercial reward appropriately.”

UBS Group completed the historic acquisition of its former rival Credit Suisse, marking a new chapter for the Swiss financial sector as the defunct bank has formally ceased to exist.

In the end, the merger was considered the least risky option. UBS offered $3 billion to acquire Credit Suisse with additional public support. Credit Suisse's AT1 bonds (CHF 16 billion) were wiped out, since they contained a clause which allowed for a full write-down if public support was provided.

Credit Suisse has said it found “material weaknesses” in its financial reporting controls and that clients were still withdrawing cash, the latest blow to the Swiss bank as it tries to recover from a string of scandals.