CRIMINAL CAPITALI$M
Factbox-Credit Suisse's scandals - spies, lies and money laundering



Mon, October 3, 2022 

(Reuters) - Credit Suisse is in the throes of one of the biggest challenges in its history, hurt by a slump in stock price and the worsening of a key gauge of its credit risk ahead of a planned revamp.

The bank is battling market skepticism about its financial health after a string of scandals, months after it was found guilty by Switzerland's Federal Criminal Court of failing to prevent money laundering in the country's first criminal trial of one of its major banks.

Here are the main crises the bank has faced in recent years:

CREDIT DEFAULT SWAP SPIKE

Already wobbling under pressure from a declining stock price, the bank in October saw its credit default swaps - which measure the cost of insuring a firm's bond against the risk of default - surge to the highest level in two decades.

That has made investors jittery about the Swiss financial giant's liquidity and capital, and prompted Chief Executive Officer Ulrich Koerner to reassure shareholders.

Later this month, the bank is set to release its blueprint for a structural overhaul, which is expected to shed more light on its plans to scale back the investment bank into a "capital-light, advisory-led" business and strategic options for the Securitized Products unit.

Swiss regulator FINMA and the Bank of England in London, where the lender has a major hub, were monitoring the situation and working closely together, a source familiar with the situation told Reuters.

COCAINE-RELATED MONEY LAUNDERING

In June, the bank was convicted of failing to prevent money laundering by a Bulgarian cocaine trafficking gang.

The court found deficiencies within Credit Suisse regarding both its management of client relations with the criminal organisation and its monitoring of the implementation of anti-money laundering rules.

Both Credit Suisse and the convicted former employee had denied wrongdoing. Credit Suisse said it would appeal the conviction.

BERMUDA TRIAL

A Bermuda court ruled in March that former Georgian Prime Minister Bidzina Ivanishvili and his family are due damages of more than half a billion dollars from Credit Suisse's local life insurance arm.

The court said Ivanishvili and his family were due the damages as a result of a long-running fraud committed by a former Credit Suisse adviser, Pascale Lescaudron.

Lescaudron was convicted by a Swiss court in 2018 of having forged the signatures of former clients, including Ivanishvili, over an eight-year period.

Credit Suisse expects the case, which it is appealing, to cost it around $600 million.

'SUISSE SECRETS'

Credit Suisse denied allegations of wrongdoing after dozens of media outlets in February published results of coordinated, Panama Papers-style investigations into a leak of data on thousands of customer accounts in previous decades.

The allegations in the "Suisse Secrets" media articles included that the bank had human rights abusers and businessmen under sanctions among its clients.

CHAIRMAN EXIT

Chairman Antonio Horta-Osorio resigned in January after flouting COVID-19 quarantine rules.

The abrupt move came less than a year after Horta-Osorio was brought in to clean up the bank's corporate culture marred by its involvement with collapsed investment firm Archegos and insolvent supply-chain finance firm Greensill Capital.

Board member Axel Lehmann took over as chairman.

TUNA BOND FRAUD

Credit Suisse pleaded guilty to defrauding investors over an $850 million loan to Mozambique meant to pay for a tuna fishing fleet and is paying U.S. and British regulators $475 million to settle the case under a deal announced in October.

About $200 million of the loan went in kickbacks to Credit Suisse bankers and Mozambican government officials. The bank was aware of a huge shortfall between the funds raised and the value of boats bought but failed to disclose this to investors when the loan was restructured in 2016, the regulators said.

Credit Suisse also arranged a loan that was kept secret from the International Monetary Fund (IMF). When Mozambique admitted to $1.4 billion in undisclosed loans the IMF pulled its support, sending the southern African country's economy into a tailspin.

ARCHEGOS DEFAULT

Credit Suisse lost $5.5 billion when U.S. family office Archegos Capital Management defaulted in March 2021.

The hedge fund's highly leveraged bets on certain technology stocks backfired and the value of its portfolio with Credit Suisse plummeted.

An independent report into the incident criticised the bank's conduct, saying its losses were the result of a fundamental failure of management and control at its investment bank, and its prime brokerage division in particular.

The report said the bank was focused on maximising short-term profits and failed to rein in voracious risk-taking by Archegos, despite numerous warning signals, calling into question the competence of its risk personnel.

GREENSILL FUNDS COLLAPSE

Credit Suisse was forced to freeze $10 billion of supply chain finance funds in March 2021 when British financier Greensill Capital collapsed after losing insurance cover for debt issued against its loans to companies.

The Swiss bank had sold billions of dollars of Greensill's debt to investors, assuring them in marketing material that the high-yield notes were low risk because the underlying credit exposure was fully insured.

A number of investors have sued the Swiss bank over the Greensill-linked funds. The bank has returned about $6.8 billion to investors so far.

SHAREHOLDER ANGER

Credit Suisse shareholders rejected a proposal from the bank's board to discharge management from other liabilities for 2020, highlighting shareholder anger of the bank's costly missteps.

The vote garnered only 35.88% approval at the bank's AGM in April, as proxy advisers pointed to risk and control deficiencies leading up to the Greensill and Archegos meltdowns.

That leaves room for shareholders to hold directors responsible for wilful or grossly negligent violations of their duties under Swiss rules.

SPYING SCANDAL

Credit Suisse Chief Executive Tidjane Thiam was forced to quit in March 2020 after an investigation found the bank hired private detectives to spy on its former head of wealth management Iqbal Kahn after he left for arch rival UBS.

Credit Suisse repeatedly played down the episode as an isolated incident.

However, Switzerland's financial regulator said Credit Suisse had misled it about the scale of the spying. The regulator said the bank planned seven different spying operations between 2016 and 2019 and carried out most of them.

In a rare rebuke, the regulator said there were serious organisational shortcomings at Credit Suisse and that the bank had even tried to cover its tracks by doctoring an invoice for surveillance.

In response, Credit Suisse said it condemned the spying and had taken "decisive" steps to improve its governance and strengthen compliance.

(Reporting by Michael Shields in Zurich, Scott Murdoch in Hong Kong, David Clarke and Niket Nishant; Editing by Jane Merriman and Matthew Lewis)

Credit Suisse slides 8% as markets fret 

about the risk of a Lehman Brothers-style 

collapse

George Glover

Mon, October 3, 2022 

Credit Suisse shares fell Monday as investors fretted about the bank's potential collapse.Fabrice Coffrini/AFP/Getty Images)

• Credit Suisse shares fell 7.8% in early-morning trading on Monday.

• Markets are fretting about the Swiss bank collapsing ahead of restructuring plans.

• Credit Suisse executives spent the weekend trying to reassure large clients about the bank's health, according to a report.

Credit Suisse shares fell nearly 8% on Monday as investors worried about the bank suffering a Lehman Brothers-style collapse.

Swiss-listed shares dropped 7.8% to 3.67 francs ($3.71) in European trading hours, having fallen over 12% earlier in the session.

Investors are fretting about the bank's overall health as it finalizes a restructuring plan due to be announced on October 27.

On Friday there was a sharp rise in spreads on the bank's credit default swaps (CDS), which protect investors if it defaults on its debts.

Senior executives spent the weekend trying to reassure large clients about the bank's liquidity and capital position, according to a report by the Financial Times.

Credit Suisse shares have fallen 60% year-to-date as investors fret about the bank collapsing in a similar manner to Lehman Brothers, the investment bank whose 2008 bankruptcy filing heralded the start of the financial crisis.

In an internal memo seen by Insider, Credit Suisse chief executive Ulrich Körner described the next few weeks as a "critical moment for the whole organization."

"No doubt there will be more noise in the markets and the press between now and the end of October," he said in a note to the bank's employees. "All I can tell you is to remain disciplined and stay as close as ever to your clients and colleagues."

"I trust that you are not confusing our day-to-day stock price performance with the strong capital base and liquidity position of the bank," Körner added.

Credit Suisse declined a request for comment from Insider.

Credit Suisse Shares Tank As Capital Concerns Spark Reminders Of Lehman Brothers Failure: 

Here’s What We Know

Derek Saul

Forbes Staff

I cover breaking news with a focus on markets and sports business.

Updated Oct 3, 2022

TOPLINE

 

Shares of Credit Suisse plunged to an all-time low Monday as investors traded on concerns about the Swiss banking giant’s financial health and management’s ability to restructure the institution in a manner that would satisfy skeptics who believe the bank’s capital position is at great risk–which is sparking whispers of a so-called ‘Lehman Brothers moment.’

Investors are concerned Credit Suisse could spark a market-moving moment like Lehman Brothers' 2008 ... [+]

AFP VIA GETTY IMAGES

KEY FACTS

Credit Suisse shares fell to an all-time low of $3.70 Monday in New York before recovering to $4.01 and fell as much as 5% in Zurich as investor confidence in the Swiss banking giant continues to fall as its capital position is being questioned after months of falling profits.

The bank is working to restore confidence with CEO Ulrich Körner writing in a Friday note to employees (which was viewed by Forbes and shared earlier with other outlets) not confuse the company’s “day-to-day stock price performance with the strong capital base and liquidity position of the bank”, while the Financial Times reported Monday the bank’s top executives called clients over the weekend to calm doubts about the bank’s financial position.

Making matter worse more difficult are a series of unverified reports linked to Credit Suisse sent social media into a frenzy over the weekend, with an unnamed large investor in the bank telling Fox Business reporter Charles Gasparino Saturday the bank is a “disaster” and ABC Australia reporter David Taylor tweeting a source told him a major investment bank was on the brink.

Taylor deleted the tweet Monday, but not before it went viral and was linked to Credit Suisse and Germany’s Deutsche Bank, while several other tweets playing up comparisons between Lehman and the European banks racked up tens of thousands of likes on Twitter.

Perhaps more crucially, Credit Suisse’s credit default swaps, an indicator of investor confidence in the bank’s financial stability, surged to an all-time high Monday.

Credit Suisse says it has close to a $100 billion capital buffer, according to the New York Times, but as the spread on its credit default swaps surge it may become more difficult for the Zurich-based institution to raise additional capital.

BIG NUMBER

$1.47 trillion. That’s how much assets Credit Suisse managed as of the end of the second quarter of 2022, compared to Lehman Brothers’ over $600 billion in assets when it filed for bankruptcy September 15, 2008, plunging the stock market.

KEY BACKGROUND

Credit Suisse is the 45th-largest bank in the world, second-largest Swiss-based bank and 17th-largest in Europe, according to S&P Global Market Intelligence. The bank installed Körner as its top executive in July after the bank missed on earnings, and Credit Suisse has been marred in recent by billions of dollars in losses from financial penalties and the collapse of asset manager Archegos and financial services firm Greensill. Credit Suisse has $100 billion available to cover any losses, according to talking points sent to executives viewed by the New York Times, and the memo said, “Speculating that we have a liquidity issue simply would be completely false.”

SURPRISING FACT

The Dow Jones Industrial Average closed out its worst September performance since 2002 on Friday, falling 9%, while the S&P 500 and tech-heavy Nasdaq had their worst Septembers since 2008. American markets inched upward early Monday, with each index rising about 1%.

WHAT TO WATCH FOR

If the price of credit default swaps for Deutsche Bank also surge. Though concerns are not as stark about Deutsche Bank as with Credit Suisse, shares of the German bank are down 42% year-to date. Deutsche Bank’s credit risk surged in 2016 over concerns about the bank’s liquidity.

TANGENT

Insolvency concerns at several firms tanked the cryptocurrency markets earlier this year when exchanges Celsius and Voyager filed for bankruptcy. Bitcoin is down 60% year-to-date to about $19,000, a far cry from its nearly $69,000 high last November.

FURTHER READING

Credit Suisse is fending off concerns about its financial health, fanning fears of another Lehman Brothers moment that could roil the global financial system. Here's what's happening, and what it means. (Insider)

Credit Suisse reassures investors over its financial strength (Financial Times)

UBS in talks to acquire embattled Credit Suisse: Financial Times

Mega-merger in Swiss banking sector could be on the cards

 Times of Malta | 03/18/2023

Credit Suisse could be bought up by UBS. Photo: AFP

Switzerland's largest bank, UBS, is in talks to buy all or part of Credit Suisse, according to a report by the Financial Times.

Credit Suisse -- Switzerland's second-biggest bank -- came under pressure this week as the failure of two US regional lenders rocked the sector. By the close of markets Friday, its shares had dropped eight per cent.

The Swiss National Bank (SNB) and financial markets watchdog FINMA told their US and British counterparts their "plan A" to stop the crisis of confidence facing Credit Suisse was to merge it with UBS, the FT reported Friday, citing unnamed sources.

The Swiss central bank "wants the lenders to agree on a simple and straightforward solution before markets open on Monday", the source said, while acknowledging there was "no guarantee" of a deal.

UBS wants to assess what risks a full or partial takeover of its rival could pose to its own business, another source told the FT.

When reached by AFP, both SNB and Credit Suisse declined to comment, while UBS and Finma did not respond immediately.

Credit Suisse, which has been in turmoil for two years, has been seen as a weak link in the banking sector due to a series of scandals and a major restructuring programme launched last October.

Its market value took a heavy blow this week over fears of contagion from the collapse of two US banks -- Silicon Valley Bank and Signature Bank -- along with the publication of its annual report, which cited "material weaknesses" in internal controls.

But shares nosedived to historic lows Wednesday after its main shareholder, Saudi National Bank, said it would not raise its stake in the group due to regulatory constraints.

By Wednesday evening, SNB had stepped in with a $53.7 billion lifeline to reinforce the group.

The idea of a takeover by UBS was also floated this week by analysts at JP Morgan, calling it "the most likely" scenario.

The idea of Switzerland's biggest banks joining forces regularly resurfaces but is generally dismissed due to competition issues and risks to the Swiss financial system's stability, given the size of the bank that would be created by such a merger.

UBS and Credit Suisse: similar Swiss banks with differing fortunes


Nathalie OLOF-ORS
Sat, March 18, 2023 


UBS and Credit Suisse, the two biggest banks in Switzerland, are in takeover talks, according to several media -- a move long deemed unthinkable as the pair are so similar.

The negotiations, which would see UBS take over its embattled smaller domestic rival, are being orchestrated by the Swiss regulators in an attempt to reassure the markets before they re-open on Monday.

Credit Suisse is still looking shaky despite taking a $54-billion lifeline thrown by the Swiss central bank. Investors remain nervous about its future following the collapse of two banks in the United States that sparked contagion fears.

During the week, US analysts had already floated the possibility of a takeover by UBS, which made a healthy $7.6 billion dollars in net profit in 2022.

Rivals Credit Suisse, headquartered no more than 300 metres away in central Zurich, meanwhile suffered a loss of 7.3 billion Swiss francs ($7.9 billion).

- Wealth management, investment banking -

Both banks derive most of their revenue from wealth management and investment banking.

UBS is the world leader in wealth management and generated nearly 15 percent of its $34.5 billion in turnover in 2022 through this global arm.

At Credit Suisse -- level with the United States' Morgan Stanley in second place -- wealth management contributed 22 percent of the 22.4 billion Swiss francs in turnover.

Investment banking represents 25.2 percent of UBS's turnover, compared to nearly 20.6 percent at Credit Suisse, with the pair running many similar activities such as mergers and acquisitions advice.

In October, Credit Suisse began a major restructuring project that plans to separate its investment banking from the rest of its activities, after a series of scandals.

However, many investors consider the revamp to be too complex -- and UBS might want to steer clear of taking over Credit Suisse's problematic investment banking.

- Retail banking in Switzerland -

Both banks are active in asset management and retail banking. UBS relies on a network of nearly 200 branches in Switzerland, compared to 95 for Credit Suisse.

The Swiss domestic branch of Credit Suisse, considered one of its jewels, is particularly active in mortgages and loans to small- and medium-sized businesses.

In a note Thursday, analysts at US financial services giant JPMorgan thought this arm of Credit Suisse would probably have to be spun off or listed separately on the stock exchange in the event of a merger.

Switzerland's Competition Commission might be reluctant to approve a merger in this field.

- Pillars of Swiss banking -

UBS and Credit Suisse are at the apex of banking in a country known worldwide for its banking industry.

UBS, in its modern form, was born in 1998 when the Swiss Bank Corporation merged with the Union Bank of Switzerland.

SBC's origins date back to 1854 when six wealth management establishments in Basel joined forces, while the Union Bank of Switzerland dates back to 1852 and the creation of a bank in Winterthur, a city at the heart of the industrial revolution in Switzerland.

Credit Suisse was born around the same time in 1856, at the instigation of Alfred Escher who wanted to finance the Swiss railway boom.

Credit Suisse has also contributed to the emergence of insurance stalwarts, such as Swiss Life and Swiss Re, and industrial giants like Brown Boveri, ancestor of the ABB engineering group.

Today the two banks are global groups, with UBS employing 72,597 people and Credit Suisse 50,480.

- Careers crossing between banks -

With the two banks' headquarters so close to each other, it is not uncommon for careers to be made with one and then continue at the other.

Credit Suisse chairman Axel Lehmann spent more than 11 years at UBS before being called to the rescue in 2021 to turn Credit Suisse around.

And Credit Suisse chief executive Ulrich Korner left the bank to join UBS before returning, first to save the asset management branch and then the whole bank by taking the CEO hotseat.

noo/rjm/jj

Troubled bank stocks drop despite $84bn liquidity boost

03/17/2023

European shares logged their steepest weekly drop in five months amid continued turbulence in the global banking sector. German Chancellor Olaf Scholz doesn't think Europe is heading for a new financial crisis.

Shares of First Republic Bank and Credit Suisse dove back deep into the red on Friday as concerns of a wider banking crisis in the United States and Europe remained elevated.

The US regional lender's perceived value slumped 25% while Switzerland's second-largest bank closed down 8%, despite massive financial lifelines thrown by regulators over the previous 24 hours.

Larger US banks, including JPMorgan Chase & Co and Morgan Stanley, stepped in on Thursday to inject $30 billion (€28 billion) into First Republic to prevent it from suffering a run by depositors similar to Silicon Valley Bank and Signature Bank — two regional lenders that went under last week.

The shoring up of First Republic reflected "funding and liquidity strains on banks, driven by weakening depositor confidence," said ratings agency Moody's, which this week downgraded its outlook on the US banking system to negative.
Swiss intervention buys time

In Europe, the Swiss central bank gave Credit Suisse an emergency loan of up to $54 billion, also on Thursday.

But many analysts, investors and bankers think the loan facility has only bought Credit Suisse some time to work out what to do next.

The US and Swiss moves did initially boost stock markets. However, the selloff resumed Friday and the stock prices of other major banks also fell, with JP Morgan, Citigroup and Bank of America down at least 3% at one point. Many of their European peers ended Friday down around 1.5%.

Bank fears spread as Credit Suisse gets help

02:25

Eswar Prasad, a Cornell University economist, said Credit Suisse has become "an important bellwether of fragilities in the global banking system" and if it failed, it could shake confidence in the banking system, causing further central bank intervention.

In a sign of falling confidence, Morningstar Direct said the Swiss bank had seen more than $450 million in net outflows from its US and European-managed funds from March 13 to 15.

Reuters, meanwhile, cited five unnamed sources as saying that at least four major banks, including Societe Generale SA and Deutsche Bank AG, have put restrictions on their trades involving Credit Suisse Group AG or its securities.
Scholz says no 'danger' of new financial crisis

Despite the market volatility, German Chancellor Olaf Scholz told business daily Handelsblatt Friday that he doesn't believe that Europe is heading for a crisis.

"I don't see that danger," Scholz said, adding that deposits are safe. "We live in a completely different time," he told the paper, referring to comparisons with the 2008 financial crisis. Scholz is also a former finance minister.

Meanwhile, Reuters reported Friday that supervisors at the European Central Bank (ECB) saw no contagion for eurozone banks from the turmoil.

A source told the news agency that members of the Single Supervisory Board were told deposits remained stable across eurozone banks. Exposure to Credit Suisse was said to be immaterial.

The meeting — a reaction to rapid developments in the banking sector and market jitters — was the second of its kind this week.

Despite the reassurances, investors are betting that banking jitters would rein in the ECB's ability to raise interest rates much further after the central bank hiked by 0.5% on Thursday.

All eyes on next Fed meeting

Focus now shifts to the US Federal Reserve next week, with traders now seeing a 67% likelihood of a smaller 0.25% increase in interest rates in the world's largest economy.

Speculation on when the Fed might start slowing its increases had been ripe for months, but the SVB collapse poured fuel on that fire last week.

SVB's demise was largely blamed on the sharp rise in borrowing costs, and concerns that other banks could suffer a similar fate, even sparking speculation that the Fed could cut rates to provide some stability. However, SVB's critics see the fault lying in the bank's own strategic errors, remaining overexposed to low-yield, long-term bonds even as interest rates and inflation were wiping out their returns.

Later Friday, SVB Financial — the parent company of Silicon Valley Bank — filed for a court-supervised reorganization under Chapter 11 bankruptcy protection.

The filing sets up a legal battle over the bank's remaining assets between the creditors of the holding company and regulators who are looking to make depositors whole.

SVB Financial Group believes it has approximately $2.2 billion of liquidity and has said it has other valuable securities and assets that are being considered for sale.

mm/msh (AFP, AP, Reuters)

Credit Suisse to borrow $54 billion from Swiss central bank

The move to borrow from the Swiss National Bank makes Credit Suisse the first major global bank to be extended such a lifeline since the 2008 global financial crisis.


DW

03/16/2023
https://p.dw.com/p/4OkND

Switzerland-based global bank Credit Suisse AG said it would borrow 50 billion Swiss francs (€50.7 billion, $54 billion) from the country's central bank on Thursday, in a move meant to strengthen its liquidity and deposit reserves.

Shares of the embattled investment bank and financial firm soared in trading after the announcement, which followed the worst trading day in Credit Suisse's history.

What's so significant about the move?

The move to borrow from the Swiss National Bank (SNB) makes Credit Suisse the first major global bank to be extended such a lifeline since the 2008 global financial crisis. Swiss authorities on Wednesday said Credit Suisse met "the capital and liquidity requirements imposed on systemically important banks" and that it could access central bank liquidity if needed.

Central banks across the world extend liquidity to banks during periods of market turmoil, including that induced by the COVID pandemic. The steps come during a severe slump in Credit Suisse's share price that triggered larger fears of a broader bank deposit crisis.

The bank also made a buyback offer on $2.5 billion worth of US debt and €500 million in European debt.

"These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders," said the investment firm's Chief Executive Officer, Ulrich Körner.

What triggered the selloff?

Credit Suisse's stock fell as much as 30% on Wednesday triggered by a Bloomberg TV interview where Mr. al-Khudairy of the Saudi National Bank — Credit Suisse's largest shareholder — said it would "absolutely not" push more liquidity into the bank. He later clarified that his staunch position was to abide by regulatory rules and statutory limitations.

The market, already on edge from last week's collapse of two mid-size US firms Silicon Valley Bank and Signature Bank, continued to sell Credit Suisse shares despite reassurance that the bank had a strong liquidity base with a 150% cash deposit ratio. A cash deposit ratio is the amount of money a bank should have available as a percentage of the total amount of money its customers have deposited in the bank.

Meanwhile, two supervisory sources told Reuters news agency that the European Central Bank had contacted banks on its watch to question them about their exposures to Credit Suisse. The US Treasury also said it is monitoring the situation around Credit Suisse and is in touch with global counterparts, according to a Treasury spokesperson.

mk/sms (Reuters, AFP)

BANK CRISIS

Credit Suisse Weighs US Asset-Management Sale, Investment Bank Chief to Exit

Matthew Monks, Jan-Henrik Förster and Dinesh Nair

Tue, October 18, 2022

(Bloomberg) -- Credit Suisse Group AG is exploring a sale of its US asset-management operations and moving closer to securing financing for other businesses, as it nears a strategy revamp that’s likely to fundamentally reshape it.

The Swiss bank has recently begun a sales process for the US operations of Credit Suisse Asset Management, or CSAM, according to people familiar with the matter. No final decision has been made and Credit Suisse could opt to hold onto the unit, the people said, asking for anonymity to discuss internal considerations.

Abu Dhabi and Saudi Arabia, meanwhile, are separately weighing whether to put money into Credit Suisse’s investment bank and other businesses to take advantage of depressed values, other people said. Deliberations are at an early stage and it isn’t clear if they’ll lead to firm offers.

With little more than a week remaining, Credit Suisse is racing to line-up financing for a restructuring that will likely see steep job cuts and a significant reshaping of the business. The investment bank is at the center of the plans and could even be broken up. While Credit Suisse made preparations to tap shareholders if needed, it would prefer to raise money through asset sales and by winning outside investors to fund businesses that it wants to spin out.

Shares of the lender rose for a second day, gaining 1.3% at 9:27 a.m. in Zurich trading. They’ve lost about half of their value this year and recently hit a new low.

“We have said we will update on progress on our comprehensive strategy review when we announce our third-quarter earnings,” Credit Suisse said in a statement. “It would be premature to comment on any potential outcomes before then.”

A sale of the US asset management operations, which include a platform for investing in collateralized loan obligations, could draw interest from private equity firms or other asset managers, the people familiar with the process said. The bank has said that the Americas account for 146 billion Swiss francs ($147 billion) of its assets under management.

The unit is one of two large businesses that the bank is looking to sell. Credit Suisse is also in the process of finding investors for or divesting its securitized products group, which has drawn interest from parties including Mizuho Financial Group Inc. and Apollo Global Management Inc., Bloomberg News has reported.

The bank is also seeking to bring in an outside investor to inject money into a potential spinoff of its advisory and investment banking businesses. A separation of the dealmaking and underwriting unit would effectively break the troubled investment banking division into three pieces.

Abu Dhabi and Saudi Arabia are exploring investments through sovereign wealth funds such as Abu Dhabi’s Mubadala Investment Co. and Saudi Arabia’s Public Investment Fund, people familiar with the matter said. A deal could also come through other vehicles in which each country owns significant stakes, the people said. But the potential investors are wary about the risk of future losses or legal issues, they said.

Abu Dhabi’s media office and the PIF in Saudi Arabia didn’t immediately have representatives available to comment. Mubadala declined to comment.

Credit Suisse has long counted on wealthy Middle Eastern investors as top shareholders, including the Qatar Investment Authority and Saudi Arabia’s Olayan Group. They’ve often invested in times of need, including the QIA’s participation in Credit Suisse’s approximately $2 billion convertible notes issuance in April 2021. That helped shore up the balance sheet after Archegos.

Separately, Credit Suisse has gauged the QIA’s interest in investing via a capital injection or stake purchase in one of the units, according to people familiar with the matter. A representative for QIA declined to comment.

As part of the planned changes, investment bank head Christian Meissner is set to depart the lender, Bloomberg reported. The banker, who has been focusing on the overhaul of the business, is looking at options including starting his own advisory firm or joining another institution next year.

An Austrian citizen, he was initially hired by Credit Suisse in October 2020 to co-run a newly created group connecting clients of the wealth management unit with investment-banking services. He became Credit Suisse’s investment-bank chief in 2021 in the wake of the $5 billion hit from the collapse of Archegos Capital Management.

Credit Suisse looks for capital from Mideast, top banker to leave

John Revill and Oliver Hirt
Mon, October 17, 2022 

A clock is seen near the logo of Swiss bank Credit Suisse in Zurich

ZURICH (Reuters) - Credit Suisse Group AG has approached at least one Middle Eastern sovereign wealth fund for a capital injection, a source said, while some funds are looking at the scandal-hit Swiss bank's businesses as potential investment opportunities.

Abu Dhabi and Saudi Arabia were weighing up, through their sovereign wealth funds, whether to put money into Credit Suisse's investment bank and other businesses, Bloomberg reported. An investment would be to take advantage of low valuations, it said.

Credit Suisse's investment banking chief, Christian Meissner, will be leaving the bank once it has announced a strategic overhaul on Oct. 27, a source familiar with the situation said.

The size and other details of a potential capital injection could not be learned.

A spokesperson for Credit Suisse declined to comment, reiterating that it will update on its strategy review when it announces third-quarter earnings.

The largest Middle Eastern sovereign fund investor in Credit Suisse, the Qatar Investment Authority, declined to comment. Mubadala declined to comment. ADIA and PIF did not immediately respond to requests for comment.

Credit Suisse's U.S.-listed depository receipts closed 3.6% higher on Monday. (Graphic: Cost of insuring Credit Suisse debt, https://graphics.reuters.com/CREDITSUISSE-CDS/dwpkroxdxvm/chart.png)

Credit Suisse, one of the largest banks in Europe, is trying to recover from a string of scandals, including losing more than $5 billion from the collapse of investment firm Archegos last year, when it also had to suspend client funds linked to failed financier Greensill.

Analysts have said the company might need as much as 9 billion Swiss francs ($9 billion) as part of a reorganization, some of which may have to come from investors and some from the sale of assets.

It has already begun a sale process for its U.S. asset management arm, with initial bids due at the end of this week, a source familiar with the matter said. Bloomberg News, which first reported the news on Monday, said the unit is expected to draw interest from private equity firms.

Its approach for a capital raise indicates that the sale of assets alone may not be enough to cover the costs of an imminent overhaul that the embattled bank hopes will draw a line under heavy losses and a string of scandals.

On Monday, the Swiss lender agreed to pay $495 million to settle legal action over mortgage-linked investments in the United States, adding to the billions it has been paying out to resolve legal cases linked to its residential mortgage-backed securities (RMBS) business in the run up to the 2008 financial crisis.

The New Jersey case was the largest of its remaining exposure on its legacy RMBS business, Credit Suisse said, with five remaining cases, all far smaller, still in litigation.

In June, Credit Suisse was convicted of failing to prevent money laundering by a Bulgarian cocaine trafficking gang, while a Bermuda court ruled that a former Georgian prime minister and his family were due damages of more than half a billion dollars from Credit Suisse's local life insurance arm.

Credit Suisse's chairman, Axel Lehmann, pledged on Friday to reform the bank after a "horrible" 2021 in which it lost billions of dollars, the biggest ever loss in its history.

"We are fully aware that we need to change and we will change, clearly," he said.

Lehmann took over in January at the Swiss bank.

(Reporting By Paritosh Bansal in New York, Elisa Martinuzzi in London, John Revill, Oliver Hirt and Noele Illien in Zurich, and David French in New York; additional reporting by Yousef Saba in Dubai; editing by John O'Donnell, David Evans and Stephen Coates)

Credit Suisse pays $495 million to settle legacy U.S. case

John Revill
Mon, October 17, 2022



ZURICH (Reuters) -Credit Suisse has agreed to pay $495 million to settle a case related to mortgage-linked investments in the United States, the latest pay-out related to past blunders that have battered the Swiss bank's reputation.

The lender has been paying out billions of dollars to resolve legal cases linked to its residential mortgage-backed securities (RMBS) business in the run up to the 2008 financial crisis.

The decline in mortgage payments reduced the value of the assets, leading to huge losses for investors.

Switzerland's second biggest bank is trying to move on from these legacy issues which have dogged its performance and cost it billions of dollars.

The bank is also trying to recover from other missteps, including losing more than $5 billion from the collapse of investment firm Archegos last year, when it also had to suspend client funds linked to defunct financier Greensill Capital.

The latest RMBS case, brought by the New Jersey Attorney General, alleged Credit Suisse had "misled investors and engaged in fraud or deceit in connection with the offer and sale of RMBS."

The attorney general's office had claimed more than $3 billion in damages in a case filed in 2013.

"Credit Suisse is pleased to have reached an agreement that allows the bank to resolve the only remaining RMBS matter involving claims by a regulator," the bank said in a statement.

"The settlement, for which Credit Suisse is fully provisioned, marks another important step in the bank’s efforts to pro-actively resolve litigation and legacy issues."

The New Jersey case was the largest of its remaining exposure on its legacy RMBS business, Credit Suisse said, with five remaining cases at various stages of litigation.

These are expected to be resolved in the next six months, a person familiar with the matter told Reuters. The total cost likely to be much less than $100 million, the source added.

RMBS are a debt-based securities, seen as similar to bonds, which are backed by the interest paid on home loans packaged together to sell to investors.

But poorly constructed RMBS's contributed to the financial crisis in 2008 - when wider groups of mortgages defaulted leading to big losses.

Credit Suisse, whose share price has more than halved in the last 12 months, has already paid out huge sums to resolve claims related to the products, including a $5.3 billion deal with the Department of Justice in 2017.

It said at that time products it sold did not meet underwriting guidelines.

It also paid $600 million to MBIA Inc last year after the New York based-municipal bond insurer paid out hundreds of millions to compensate investors.

The bank, one of the largest in Europe and one of Switzerland's global systemically important banks, is scheduled to release details of a much anticipated strategic review alongside third-quarter results on Oct. 27.

In June, the bank was convicted of failing to prevent money laundering by a Bulgarian cocaine trafficking gang, while a Bermuda court ruled that a former Georgian Prime Minister and his family were due damages of more than half a billion dollars from Credit Suisse's local life insurance arm.

The U.S. Justice Department is also investigating whether Credit Suisse continued helping U.S. clients hide assets from authorities, eight years after the Swiss bank paid a $2.6-billion tax evasion settlement.

(Reporting by John Revill and Oliver Hirt; Editing by Kirsten Donovan, Mark Potter and Jane Merriman)

Credit Suisse revisits ex-U.S. employee's spying claim

NEW YORK/FRANKFURT (Reuters) - Lawyers for Credit Suisse (CSGN.S) last week re-interviewed a former bank executive who said the Swiss lender had her followed in New York, according to a person familiar with the matter, weeks after the company dismissed her allegation as baseless.


Credit Suisse asked lawyers from Zurich-based firm Homburger to speak again to Colleen Graham, who worked in the United States for a joint venture half owned by the bank, about her allegation that she was put under surveillance in July 2017 while in dispute with the bank, the person said.

Two Homburger lawyers met Graham in midtown Manhattan on Jan. 30 and said they had follow-up questions about her surveillance allegations, the source said.

The source declined to be identified due to the sensitivity of the matter.

Reuters could not determine why Credit Suisse questioned Graham again after saying in December it had conducted “thorough and comprehensive internal investigations” into Graham’s allegations and found them to be “entirely baseless”.

Graham was formerly Credit Suisse’s compliance head for the Americas before being selected to co-head a joint venture called Signac. She left the bank in July 2017 after refusing to adopt its position on an accounting issue that she believed was “mistaken”, according to court documents filed with the U.S. Department of Labor.

According to a Nov. 2017 court filing, Graham said Credit Suisse started retaliating against her in March 2017 after the accounting dispute by threatening to fire her, withholding a bonus, and withdrawing a job opportunity.


Robert Kraus, a lawyer representing Graham, confirmed the Jan. 30 meeting but said Credit Suisse’s latest inquiry “did not appear designed to uncover the truth”.

Investigators did not want to hear from her about the motives for the spying and about a pattern of related misconduct, Kraus said.

Credit Suisse and Homburger declined to comment on whether the firm’s lawyers had been sent by the bank to interview Graham again.

Credit Suisse said that since 2017 Graham had brought several court actions against the bank and others in connection with her former employment and they had been dismissed.

Graham has one pending lawsuit against Credit Suisse for unlawful retaliation under the Sarbanes Oxley Act.

“We are aware that Ms Graham is preparing yet another action against Credit Suisse. As part of their investigation, Homburger has investigated Ms Graham’s report that she had been followed in or around New York on behalf of Credit Suisse. Homburger found no indication that her report is true,” it said.

Homburger said it did not comment on its investigations and noted that Credit Suisse had previously reported that, “we did not find any indications that corroborate Ms Graham’s report that she had been tailed on behalf of Credit Suisse.”

MANHATTAN

Homburger was hired in September by Credit Suisse to look into allegations the bank spied on former wealth management chief Iqbal Khan, previously one of its most senior executives.

Graham emailed Credit Suisse that month with details of her alleged surveillance and asked it to share the information with Homburger, according to the source.

She separately emailed Homburger that month and discussed the matter with a partner from the law firm on Sept 30.

On Oct. 1, Homburger released a report saying Pierre-Olivier Bouee, the bank’s then chief operating officer and a top lieutenant of Thiam, had ordered surveillance on Khan to see if he was trying to poach Credit Suisse colleagues to join him at UBS. Khan had left Credit Suisse for its crosstown rival over the summer.

In the report, Homburger said “to date, the investigation has not identified any evidence that Credit Suisse had ordered observations of other employees.”

Credit Suisse said Bouee had acted alone and Thiam was unaware of the surveillance. Bouee resigned after taking responsibility for the spying. He has not commented publicly on the scandal and Reuters could not reach him for comment.

Following the internal probe, Thiam called the spying an isolated event. But a second case emerged, when it was revealed in December that the bank had also spied on its former head of human resources, Peter Goerke.


Credit Suisse said Bouee was again to blame in what was a rogue operation.

In their Jan. 30 meeting, the two Homburger lawyers did not

discuss the state of their investigation, but asked Graham details about her alleged surveillance, such as the attire of the woman she said tailed her, and whether she alerted the police, the source said.

CRIMINAL CAPITALI$M

Credit Suisse to pay $234 million to settle French tax fraud case

French prosecutors said that Credit Suisse has agreed to pay 238 million euros ($234 million) to settle tax fraud allegations, the latest blow for the embattled Swiss bank


AP | Paris
Last Updated at October 24, 2022 

Photo: Bloomberg

French prosecutors said Monday that Credit Suisse has agreed to pay 238 million euros (USD 234 million) to settle tax fraud allegations, the latest blow for the embattled Swiss bank.

The bank will pay 123 million euros in fines and 115 million in damages and interest to France, whose investigators will close an inquiry launched in 2016 on possible charges of aggravated tax fraud laundering and illegal soliciting, French prosecutor Jean-Franois Bohnert said in a statement.

French media have reported that Credit Suisse representatives courted wealthy French customers to persuade them to open accounts with the bank that weren't declared to French tax authorities.

Credit Suisse says it doesn't acknowledge criminal liability in the settlement.

The bank is pleased to resolve this matter, which marks another important step in the proactive resolution of litigation and legacy issues," the company said in a statement.

It comes just a week after Credit Suisse agreed to pay USD 495 million in a U.S. settlement over a yearslong dispute tied to mortgage-backed securities, an investment vehicle that played a central role in the 2008 financial crisis.

The settlements are just the latest of a string of woes for Credit Suisse, including bad bets on hedge funds and a spying scandal involving UBS.

A Swiss court fined the bank more than USD 2 million in June for failing to prevent money laundering linked to a Bulgarian criminal gang more than 15 years ago.

CEO Thomas Gottstein announced in July that he was resigning after 2 1/2 years in the job as the bank posted a net loss of 1.6 billion Swiss francs (about USD 1.7 billion) in the second quarter.

ALSO READ
Credit Suisse dispute: How SpiceJet came close to getting wound up
Credit Suisse in revival mode, may cut thousands of jobs globally
Credit Suisse loses Asia deputy wealth management head as departures mount
Weak financials, shaky management: What's wrong at Credit Suisse?
Credit Suisse offers to buy back debt securities worth 3 bn Swiss francs

Credit Suisse reaches €238m settlement to resolve French legacy case

BANKING SERVICESINVESTMENT BANKING

By NS Banking Staff Writer  25 Oct 2022

The agreement with the Parquet National Financier (PNF) will resolve a legacy investigation into Credit Suisse’s role in helping clients in France to avoid paying taxes on their wealth, between 2005 and 2012

Credit Suisse headquarters in Zürich (Credit: Roland zh/Wikipedia)

Swiss investment bank Credit Suisse has reached €238m settlement with France, which resolves a legacy tax fraud and money laundering case against the bank.

The bank has signed an agreement with the Parquet National Financier (PNF), a judicial institution in France responsible for tracking down economic and financial crime.

Under the terms of the agreement, Credit Suisse will pay a public interest fine comprising a profit disgorgement of €65.6m, an additional amount of €57.4m, and €115m in damages to the French State.

The agreement will terminate an investigation into the Swiss bank’s role in helping the clients in France to avoid paying taxes on their wealth.

The alleged scheme, which took place in several countries between 2005 and 2012, caused fiscal damage of more than €100m to the French state, reported Reuters.

Credit Suisse, in its statement, said: “The settlement does not comprise a recognition of criminal liability. The bank is pleased to resolve this matter, which marks another important step in the proactive resolution of litigation and legacy issues.”

Earlier this month, Credit Suisse reached a $495m settlement to resolve legacy cases related to its Residential Mortgage-Backed Securities (RMBS) business in the US.

The Swiss investment bank has signed the agreement with the New Jersey Attorney General (NJAG), to resolve claims related to more than $10bn of RMBS.

The settlement is said to end the bank’s largest outstanding RMBS litigation case, filed in 2013, while five other cases are continuing at various stages.

NJAG alleged that Credit Suisse had misled investors and engaged in fraud with respect to the offer and sale of RMBS, and claimed more than $3bn in damages.

The remaining cases are expected to be resolved in the coming six months, and cost a total of less than $100m, reported Reuters.

Furthermore, the bank failed to prevent money laundering by a Bulgarian cocaine trafficking gang, and several cases are pending in Bermuda, Singapore, and other countries.