The scandals of the last few years of the Credit Suisse bank, the “weak link” of the system in Switzerland

Shares of Credit Suisse, which is undergoing a major restructuring, continued to plunge Wednesday after a series of scandals in recent years at the financial institution, considered the “weak link” in the Swiss banking sector.

The bank has seen its wealth management arm falter since the 2021 bankruptcy of the British financial company Greensillin which it had committed approximately $10,000 million across four funds.

When an insurer refused to renew the contracts of Greensill – a British company that used complex financial arrangements to lend money to companies to pay bills – the bank, no longer able to calculate the value of the funds, began liquidating them.

Eventually Greensill failed and it staggered companies that depended on it for liquiditya failure that also affected its creditors, including the Japanese giant SoftBank.

the scandals

Four weeks later, US fund Archegos could no longer inject money to hedge its investments in derivatives, which triggered a sell-off on Wall Street.

Several large banks have been affected, Credit Suisse in primis, with about 5,000 million dollars.

In October 2021, the bank was involved in a case of corruption in Mozambique relating to loans to state-owned enterprises.

The American and British authorities have imposed penalties of 475 million dollars on the bank.

The loans, granted between 2013 and 2016, were supposed to finance maritime surveillance, fishing and shipbuilding projects, but were diverted in part for bribes.

In December 2021, the Swiss tabloid click revealed that the bank’s president, Antonio Horta-Osorio, had violated the quarantine rules relating to the covid-19 pandemic.

More press revelations followed, such as failure to comply with sanitary restrictions attend a tennis match at Wimbledon.

The veteran banker resigned less than nine months after taking office.

Research

In February 2022, the Organized Crime and Corruption Reporting Project (OCCRP), a consortium of 47 media outlets, including Le Monde and the New York Timespublished an investigation entitled “Suisse secrets”.

The investigation, based on account information from 1940 to the end of 2010, reveals that the bank it housed funds of clients involved in criminal and corruption cases.

In March 2022, a Bermuda court confirmed that former Georgian Prime Minister Bidzina Ivanishvili had suffered losses on investments managed by Patrice Lescaudron, former Credit Suisse banker, fired in 2015convicted of fraud in Geneva in 2018 and who committed suicide two years later.

In June 2022, the bank was convicted in Switzerland in a case of money laundering linked to a Bulgarian cocaine ring. He was fined 2 million Swiss francs.

In October 2022, the bank settled US litigation dating back to the 2008 financial crisis over mortgage-backed securities, settling in exchange for a $495 million payment.

In France, he agreed to pay 238 million euros to avoid prosecution illegal customer prospecting and aggravated tax fraud between 2005 and 2012.

At the end of February 2023, two years after the Greensill bankruptcy scandal, the Federal Financial Market Authority (FINMA) accused Credit Suisse of having “seriously breached its prudential obligations” in terms of risk management.

Last week, the bank postponed the release of its annual report after a call from the US financial markets regulator (SEC), which raised questions about its accounts for the 2019 and 2020 financial years.

Tuesday, Credit Suisse recognized “material weaknesses” on its internal controls in its annual report, running stocks down.

The price’s plunge accelerated on Wednesday after its largest shareholder said it would not back the entity by increasing its stake.