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This is a story of finance gone wrong.

The Credit Suisse story is the story of one of Switzerland’s most important institutions, one of the most important banking institutions in Europe.

The bank which ignored risks, ignored red flags.

We are in a very challenging situation. We need to address that.

There is a cultural issue at the bank, good financial results at any price.

It’s a tale of scandal after scandal.

But at certain points during this, it has gotten quite hard to believe.

You have Bulgarian drug smugglers, oligarchs.

General chaos at one of the world’s top wealth managers and investment banks.

A bank that used to be a national pride, now trying to recover from that.

S&P Global downgraded Credit Suisse AG.

We have taken very decisive steps.

Credit Suisse let its commercial team override its risk team, and what we’re seeing now is historic scandals, but also some more recent scandals. It’s just created the basket case bank of Europe. Let’s roll back the clock to 1856. Alfred Escher, the 19th century industrialist, he’s looking to modernise Switzerland. He sets up his own bank we know today as Credit Suisse.

What a lot of people maybe outside of Switzerland don’t quite understand is just how integral Credit Suisse is to the history of Switzerland.

I’m Axel Lehmann, chairman of the Credit Suisse Group since January this year. Banking is really part of the fabric of Switzerland, and Credit Suisse was very instrumental to the economic success of Switzerland. It’s a big honour to be asked to chair such a great organisation with that legacy.

I mean, Credit Suisse is fundamentally at its core a private bank. It’s a bank that caters to very rich individuals.

So the central cog is the wealth management business. And this really is the driving engine for the bank. It provides financial services. It provides advice, and it helps protect the wealth of the world’s richest people. Connected to that cog are the asset management business, which invests a lot of those funds, the investment bank, which is tied not only will they manage their wealth, but they’ll help them run their businesses, they’ll help them to provide financing, loans, help them with IPOs, listing their companies. And then you also have the Swiss domestic bank.

That’s a global organisation with these components that interlock together.

Governance and risk management is essential where we have all these different services provided to customers, which may create conflicts of interests.

A huge amount of the world’s very wealthy have relationships with Swiss banks. Switzerland has a long history of the rule of law. The Swiss Franc is very stable. Switzerland has its historic bank secrecy laws. Clients can be guaranteed a huge amount of discretion.

Combine that with its steadfast neutrality through multiple world wars.

Then there is also, of course, the concierge concept of Swiss banking. You will be looked after. They’re luxury venues. All of that is a package that they use to lure the super rich.

In Zurich, you have two main banks. You’ve got Credit Suisse and you’ve got UBS. Credit Suisse has for, in recent years played the junior partner. But actually, Credit Suisse is within Switzerland seen as much more of the Swiss national bank.

The clue is in the name. I mean, it is quite literally The Bank of Switzerland. And if you go to Zurich, right in the centre, the Paradeplatz Square, there are its two major financial institutions, literally metres from each other.

Credit Suisse is innovative, a bit more aggressive, probably also more risk-taking. UBS is much more structured, more boring, but also less risky.

Credit Suisse, on a relative scale, was probably one of the least affected banks by the financial crisis. UBS was the bad boy. It had to be bailed out. They had insider trading scandals.

There wasn’t the requirement on them to really face up to a lot of the problems that had emerged in the run up to the financial crisis and the immediate years afterwards.

It’s almost as though they didn’t get the memo in 2008, when we had the last banking crisis. We’ve seen many banks rehabilitate and change how they operate. Credit Suisse has not.

Early 2019, and the cogs really start to come loose at Credit Suisse. The chief executive at the time, Tidjane Thiam, he’s a debonair, gregarious, international financier celebrity.

One of the people he brought in was a former auditor from EY, Iqbal Khan, hyper ambitious. But the two men, whether it was Tidjane Thiam’s leadership style or Iqbal Khan’s vaulting ambition, started to fall out. Iqbal Khan had bought the house directly next to Tidjane Thiam, on the so-called Gold Coast of Lake Zurich, and proceeded to knock the entire thing down. Anyone that’s had a neighbour with construction work knows how annoying this is, but it’s particularly annoying, I think, when it’s one of your subordinates and the work is consistently going on, even on Saturdays, and they’re building a bigger house than you.

So Tidjane Thiam accused Iqbal Khan of building a big window which looked into his lounge, and in response planted some rather large trees, blocking Mr Khan’s view of Lake Zurich. The two men’s partners got into a bit of an argument, and it very nearly came to blows.

Khan was poached by UBS.

Usually when a big bank or a wealth manager leaves, they have a long period of gardening leave. You are not allowed to work. You’re not allowed to talk clients. You’re not allowed to poach staff. And Zurich is a small town. You can walk across it in about 25 minutes, so it’s impossible not to bump into clients, customers, potential hires.

Someone at Credit Suisse decided to hire a spying firm. These people started following around Iqbal Khan, and he noticed. He stopped his car in the centre of Zurich and confronted them.

This is something that you usually you watch on TV, cars following another car, and this is something not in Swiss culture.

A lot of this was around the bickering between Iqbal Khan and Tidjane Thiam doing unneighborly things to each other, and I think that probably struck a lot of Swiss as being deeply inappropriate and not discreet, conservative.

It emerged that Iqbal Khan wasn’t the only person Credit Suisse had tailed. This eventually led to the ousting of Tidjane Thiam in spring 2020. Step forward Thomas Gottstein.

The safe pair of hands, really. He is, of course, Swiss. He’d been in charge of the Universal Bank here, which I guess is the most boring and stable part.

There were certainly a lot of negative press, but I think that’s behind us now and we are really looking forward now to continuing on the successful path.

Within three weeks of Gottstein taking over, Switzerland was forced into lockdown. Thomas Gottstein said he wanted 2021 to be a clean slate.

2021, however, would turn out to be one of the most tumultuous times in Credit Suisse’s 166-year history.

His promise was completely in tatters. You had these two mega scandals that from a financial point of view were vastly more relevant than the Spygate affair.

Disaster struck at the beginning of March, 2021. Credit Suisse had been persuading its wealthiest clients to invest in a suite of funds known as the Greensill supply chain funds.

Greensill was very heavily linked to an industrialist, Sanjeev Gupta, but also SoftBank, the huge Japanese technology/speculative investor. Not all of the deals that were going down were entirely aboveboard. Allegations of fraudulent invoices, circular financing.

They had amassed $10bn of funds from these wealthy clients. And the promise was put your money in here, it’s very safe.

Early 2021, all of the supply chain finance stuff around Lex Greensill, Sanjeev Gupta, and SoftBank starts to unravel. The bonds that Credit Suisse investors had been persuaded by the wealth management unit to invest in were not going to get paid back.

Something as prosaic as insurance policies coming to an end brought these funds to a staggering halt.

That was the trigger to the collapse. Underlying that were investments in risky future receivables. They were investing on the bet that those monies would be paid over.

And Credit Suisse was forced to suspend them, locking in $10bn worth of their clients’ assets and unleashing one of the biggest scandals in Credit Suisse’s history.

It’s about $2.3bn of this $10bn is unaccounted for.

We are acting on behalf of investors in Greensill who made their investment through Credit Suisse to recover losses suffered. It is not going to dip into its own reserves to pay the customers it mis-sold to. These are long-standing clients of Credit Suisse, in many cases.

I speak to some of these clients. They are furious, and they think they’ve been lied to. These are powerful people.

Credit Suisse had a separate relationship with Greensill and was courting it in relation to its IPO. And there’s an argument to have that blinded it.

Just as Credit Suisse was reeling from this, it lurched from one crisis to the next, this time, 3,000 miles away in New York.

Bill Hwang’s family office, Archegos Capital, Bill Hwang had made oversized bets on a few stocks using enormous leverage from the so-called prime brokerage businesses of a number of global banks. None of the banks knew quite how much leverage Bill Hwang had. It’s actually $160bn.

Lots of banks were caught in this – Morgan Stanley, UBS. Credit Suisse was left nursing $5.5bn worth of losses, its biggest trading loss in its entire history. It sent its share price tumbling. Regulators were poring all over it. Its clients were preparing lawsuits against it.

And this obviously raised all kinds of questions, how the bank’s different cogs were fitting together. Bill Hwang was a wealth management client who had strong relationships with some of the bank’s top executives from Asia, through to the UK. Credit Suisse was really bending over backwards to please him, to give him more leverage through its investment bank in order to run more of his money on the private banking side, which is where it made its real profit.

A credit loss of such a magnitude to a single party highlights indeed deficiencies in risk management.

So the bank spirals further down into crisis. It has to raise capital from its long-suffering investors. The bank has to publish an absolutely excoriating report from an external law firm.

The report showed stunning deficiencies. And yes, this reflects the risk culture, which Credit Suisse now clearly says has to change.

Problematic client relationships within wealth management, prime broking, and investment banking businesses can spiral out of control if you don’t have the right culture, you don’t have the right procedures, and you don’t have the right technology in place.

It is a very deep-rooted issue, which really needs time to be solved.

Credit Suisse needs to draw a line under this scandal. It needs to hire a heavy hitter to replace embattled and I think at this point discredited chairman, Urs Rohner. So they turn to a big deal banker, Sir António Horta-Osório, who was knighted for his turnaround of Lloyds Bank after the financial crisis in the UK.

The idea was that AHO, as he is often known in the industry, would cut a lot of risk, which really harmed its ability to generate returns. This was seen as the medicine that was required.

I am Vincent Kaufman. I am the CEO of the Ethos Foundation created by two Swiss pension funds to promote sustainable investment. We do represent at Credit Suisse general meeting between three to five per cent. We were a bit surprised. We were expecting someone from maybe the Swiss economy. But then we look at his CV, his track record, we said, that’s not a bad idea. A good person with a very good knowledge of the private bank and wealth management, less on the investment bank. And that was for us something we always push, reduce this exposure to investment bank, to risky asset.

António is Portuguese. He is very talented, and he knows this. But he’s not Swiss. This can always be a problem, as Tidjane Thiam found out. Tidjane Thiam was criticised for being aloof, imperious, enjoying the jetset lifestyle too much. And that was always going to be a danger for Horta-Osório.

His downfall came about from a combination of his hubris, self-confidence, the way he alienated himself from his executives and his board, but also taking the company’s private jets for his own personal uses.

The sheer number of trips he’s been taking to Lisbon, which is not a major revenue earner, it’s pretty obvious he’s using the private jet to go home a lot.

At the height of the Covid lockdowns, he flew into London to attend on the same day the Wimbledon tennis finals, and that very evening watched England lose on penalties to Italy in the European Championship final. By doing so, he had contravened the UK’s Covid rules.

As a new chair, you want to change the culture. You have to be free of any scandals and reputational issues. When you start violating rules yourself, then we have a major issue.

There was a kind of sense that here was yet another outsider being brought in to try and change or manage Credit Suisse, but who had moral failings.

And ultimately, he had to go.

And the bank is back in crisis again. One of the main scandals of that reflected Tidjane Thiam’s time at Credit Suisse was a terrible incident where some of their staff collaborated with a middleman and a Russian bank, VTB, to sell 3bn of bonds to the country of Mozambique, ostensibly to build a fleet of amphibious warfare vehicles to protect a separate fleet of tuna fishing boats. But a significant amount of this money was embezzled by the various bankers involved, the middlemen, and local officials.

We’re acting on behalf of bondholders who are suing Credit Suisse in connection with bonds arranged and issued in favour of Mozambique. The debt is unpaid and due and owing, and it stands at 200mn.

So Credit Suisse has settled with all three regulators who investigated it, the UK, the US, and Switzerland. We’re talking a really big deal here. It was around $11bn, in part because all world aid was withdrawn and they significantly suffered as a consequence of that. And $11bn billion translates to around $400 per individual.

So a country that was already struggling, really, really struggled significantly as a consequence.

2022 has been a long way from the clean slate that Gottstein promised a year earlier.

Beneath that very respectable surface and all of those kind of marble lobbies and very smart entranceways, there have been a whole series of dubious dealings over the years.

Credit Suisse has been in this long-running dispute over allegations that it helped a Bulgarian former wrestler run his international cocaine smuggling ring.

Here was a case that was removing the cover so that we could see the kind of inner mechanics and the way that the bank had functioned over many years. And how risk management or anti-money laundering practises were really completely irrelevant. This was historic, of course, in 2004 and 2007.

The details are shocking. Their due diligence for their client is putting Bulgarian news articles into Google Translate and attempting to read them.

What was really crucial was protecting the secrecy of clients, even to the point where headlines about assassinations and drug smuggling weren’t enough to dissuade risk management from continuing to take money from those clients.

And it just raises the question, how many other clients like this do they have?

It looks like in emerging countries where there is absolutely no regulation, criminal involved and money laundering at this level is, yeah, it’s unbelievable.

Just as they’re reeling from accidentally financing a cocaine smuggling ring, they get hit by another one of these global data leaks, so-called Swiss Leaks data dump.

This detailed lots of cases where the bank had previously offered a sanctuary to dirty money flowing around the world from family members of kleptocrats and oligarchs corrupt government officials and criminal organisations.

Unwanted links to potential human trafficking, embezzlement.

Credit Suisse confirmed 90 per cent of those account are now closed since 2015. There is still 10 per cent of the accounts which are still under scrutiny. So this was at the general meeting 2022 requested a special audit on this affair, Swiss leaks, and on the Greensill affairs. Because of course the board is requesting internal investigation, but they pay the internal investigation, and can decide what they want to publish or not publish. Because for the Greensill case, they decided not to publish the investigation.

The regulator here, Finma, say that they take a very hard line. But crucially, it all goes on behind closed doors. It’s very hard to get a sense of whether the Swiss are taking it seriously or not.

And they say, don’t worry. Finma is doing its work. So as investors, shareholders, or stakeholders of the bank, we don’t have any clue of what happened.

A further blow comes. The former prime minister of Georgia has been suing Credit Suisse in the Caribbean.

Bidzina Ivanishvili, a client of a rogue private banker who had fleeced a whole load of incredibly wealthy people out of their savings and funded a lavish lifestyle of Rolex watches and fast cars. Credit Suisse had always played the card that this was a rogue bank and nothing to do with them.

And he wins. He wins a huge judgement against them. And the bank is suddenly booking a massive impairment, blowing a hole in its latest quarterly results.

As capital of Credit Suisse is facing investigations from regulators in Switzerland and the US, looking at a deal it struck at the end of 2021, where it tried to pass on a whole load of risk it had taken on by loaning money to oligarchs and other ultra-rich customers when they were buying private jets and yachts.

Boats and planes are obviously risky assets. They can be seized if you get onto a sanctions list. So Credit Suisse was trying to syndicate and sell the risk of financing some of these assets out to hedge funds.

We published a story which sort of laid bare some of these transactions. Credit Suisse got a lot of flak from its clients on the back of that.

Credit Suisse is obviously upset and sends out an order to all of their clients, all of the hedge funds they were trying to sell the risk to, asking them to destroy the documents.

This was a fairly innovative debt deal. Securitizing this debt and passing it on to investors who are willing to take on the risk.

And it becomes misinterpreted by regulators as an attempt for them to destroy evidence, and now they have to explain to regulators in the US and Switzerland why they weren’t attempting to cover up their business with sanctioned oligarchs.

The remuneration system gives a wrong incentive to the client relationship manager, trying to get some net new money at any price.

Risk-taking was in fact rewarded. It also doesn’t appear to have the right systems and checks and balances.

Yes, an organisation should have better monitored and controlled certain behaviours. Governance and risk management is for every financial institution, critical and central.

If you’re looking at the future viability of its business, you’ve just got some of their top staff in the investment bank, in the wealth management unit, leaving. They’re fed up because bonuses are being cut. And it’s kind of franchise damaging. How long can you survive if all of your top people leave?

Talent management is absolutely a key. We’ll continue to be able to attract top-notch talent. Just look to the calibre of new members of the board we were able to attract. Just look to the calibre of new executives and the group executives we were able to attract. So people see the current situation, it’s a great brand it’s a great franchise under pressure with a lot of upside.

In the year following the twin collapse of Archegos and Greensill, Credit Suisse’s share price halved. The bank said, this is very much a transition year, and the clock is ticking over whether the bank can come out of this storm unscathed.

S&P Global has downgraded Credit Suisse AG to A from A-plus. Credit Suisse is likely to report depressed results, run down of revenues from investment banking businesses that they exit. And the fruits of restructuring are still to come, if it proves successful.

Credit Suisse fully acknowledged that the scandals were not just the result of a couple of individuals going off on a frolic. I think that is the first step, actually, towards rehabilitation, actually acknowledging that there is a bigger issue.

We are in a very challenging situation. Too many things have happened over the last couple of years. It’s not only about individual mistakes that have happened. That is something you need to address from a systemic perspective, from an organisational perspective.

With Axel Lehmann, we have a new chairman who knows about risk management. He was chief risk officer of Drake Insurance, and then he led UBS.

A big bank with an established global reputation decades-old is a very hard thing to kill. A lot of people think it will bounce back.

Changing the culture, which is so deeply embedded in the bank, is going to be very, very hard work. But that’s not to say it can’t be achieved. If you look at, for example, Deutsche Bank and UBS.

In my estimates, they will still reach a profit this year, but clearly it’s market dependent. It will take a number of years to improve their reputation again.

And there are also tail risks pending from ongoing litigations and investigations.

A lot of parts of the bank are doing really great. We should not forget that. It’s not a sprint it’s more than a marathon. It’s important that we do quarter-by-quarter progress.

The bank is very serious about changing itself, but it’s like turning a supertanker. The question is whether the amount of time that it’s going to take is as much time as Credit Suisse’s shareholders are willing to give the executives.

We have taken very decisive steps. It starts at the top, with the board of directors. 50 per cent of our members are new or less than a year in their job. We have everywhere new committee chairs, including me as the new chairman. We have a brand new executive board with 11 out of 13 members that are new. Shareholders give us credit. They believe in Credit Suisse, but we need to show progress.

Their ambitions would be to return to profitability levels.

This is not feasible over the foreseeable horizon.

It’s a very difficult time. Markets are very volatile. The situation in Ukraine, with sanctions against Russian individuals and complete collapse of business in Russia, which was integral to a lot of private banking wealth here in Switzerland.

In challenging time, when you are under pressure as an organisation, you can do things that normally you can’t do. It’s also an opportunity.

People are watching to see what happens next. Will it be bought? Will it be stripped of its assets? Will it be folded into a merger with UBS? Who’s going to be buying this bank at this time? It’s cheap, but it’s cheap for a reason.

One option would be a spin-off of the Swiss business. The question really is what happens to the rest of the business. There’s too many issues for a systemic bank to be taken over, neither domestically, so a UBS-Credit Suisse merge, nor international, or US bank. I think they will retain an international business. They have good positions in my view, let’s say, in Asia.

I think there is opportunity to grow on wealth management.

We have a 166-year old history, and I’m a strong believer that as an independent company alongside other large banks in Europe and in Switzerland, that’s the future of the bank.

It remains a group, a strong international franchise, high diversification of revenues, strong capital, and high buffers of bail-inable debt to protect senior unsecured creditors.

We’re not quite sure whether we’ve reached the bottom of this yet, because every month, every quarter, every year seems to bring more scandal.

Who’s to say there won’t be another scandal brewing that we won’t be hearing about in a few weeks and a few months time?

We’ve been through a fundamental review of all our risk position and legacy issues. They continue to pop-up here and there, but I’m confident that we have bottomed out, and we will bottomed out, and we will go step-by-step into the right direction.

Come out of the main train station in Zurich, there’s a prominent statue of Alfred Escher looking down the main thoroughfare of the city. If he was looking at the bank today, he would be severely disappointed.

The perception of Credit Suisse has obviously changed. Every additional scandal that comes up, the reaction is kind of oh, OK, it’s another one. Ah yes, of course. It’s Credit Suisse.

The Swiss Parliament is very weak in relative terms, and the executive here, the Federal Council, doesn’t really like to interfere. There’s a cultural attitude in some of the banks and financial institutions that may mean something can be dealt with quietly, that’s better than having to admit it fully in public. Problems end up sometimes getting stored up over time because they are not nipped in the bud. And so you have as venerable an institution as Credit Suisse having suddenly to admit this whole slew of scandals. Secrecy is very important, is very ingrained, and the Swiss do not like their dirty linen aired in public.