(News Bulletin 247) – The Swiss banking establishment which suffered a stock market torture on Wednesday saw its reputation and its finances be mistreated by several files. Overview.
Credit Suisse shares continued to tumble on Wednesday as the bank, at the heart of a major restructuring after a series of scandals, was seen as the “weakest link” in the Swiss banking sector.
Bankruptcy of Greensill
In March 2021, Credit Suisse announced the suspension of four funds, in which $10 billion had been invested, linked to Greensill, a British company that relies on complex financial arrangements to lend money to companies to pay their bills.
An insurer refuses to renew Greensill’s contracts. The bank can no longer calculate the value of the funds and initiates their liquidation. Greensill goes bankrupt, wrecking businesses that depend on it for cash.
Its bankruptcy also affects its creditors, including the Japanese giant SoftBank. Credit Suisse is embarking on a battle to recover the sums invested in these funds and reimburse subscribers.
Archegos Fund
Four weeks later, the American fund Archegos can no longer reinject money to cover its investments in derivatives, which triggers a massive sale of shares on Wall Street.
Several major banks are affected. Credit Suisse is the most affected, to the tune of some $5 billion.
Loans in Mozambique
In October 2021, the bank was caught up in a corruption case in Mozambique around loans to state companies. The American and British authorities impose 475 million dollars in penalties. The credits, granted between 2013 and 2016, should have financed maritime surveillance, fishing and shipyard projects, but were partly diverted for bribes.
The bank agrees with the British authorities to cancel the 200 million dollars owed by the country, plunged into a serious financial crisis. The Swiss market watchdog imposes restrictions on new loans to countries that are financially weak or exposed to corruption.
Violation of quarantine rules
In December 2021, the Swiss tabloid Blick reveals that bank president Antonio Horta-Osorio broke quarantine rules related to the Covid-19 pandemic. Other press revelations follow, in particular on breaches of health restrictions to attend a tennis match at Wimbledon.
This seasoned banker – who had promised to put risk management back at the heart of Credit Suisse’s culture – resigned, less than nine months after taking over.
“Switzerland secrets”: sulphurous customers
In February 2022, the Organized Crime and Corruption Reporting Project (OCCRP), a consortium of 47 media, including The world and the New York Times, publishes a survey called “Swiss Secrets”. Based on data from 18,000 accounts dating from the 1940s to the end of the 2010s, it reveals that the bank hosted funds from sulphurous customers.
The bank “strongly” rejects the findings of this investigation, saying its data is “partial”, “inaccurate” or “taken out of context”.
Trial in Bermuda
At the end of March 2022, a Court in Bermuda confirms that the former Georgian Prime Minister Bidzina Ivanichvili suffered losses in investments managed by Patrice Lescaudron, a former star banker at Credit Suisse, dismissed in 2015, then convicted of fraud in Geneva in 2018, who committed suicide two years later.
The Court accuses him of having turned a blind eye to his embezzlement.
Bulgarian cocaine laundering
In June 2022, the bank was convicted in Switzerland in a money laundering case linked to a Bulgarian cocaine network. She was implicated in a lawsuit around a former adviser who had executed or had transactions executed between 2007 and 2008 despite concrete indications of the criminal origin of the funds.
The bank is fined 2 million Swiss francs.
Two agreements for old disputes
In October 2022, the bank settles a dispute in the United States dating from the 2008 financial crisis over mortgage-backed securities by reaching an agreement for a payment of $495 million.
In France, it agrees to pay 238 million euros in order to avoid prosecution for illegal canvassing of customers and aggravated laundering of tax fraud between 2005 and 2012.
Greensill, the sequel
At the end of February, two years after the Greensill bankruptcy scandal, the Swiss financial market authority (Finma) accused Credit Suisse of having “seriously breached its prudential obligations” in terms of risk management.
Finma calls for corrective measures and opens four procedures against former managers of the bank.
Annual report postponed
The bank last week pushed back the publication of its report following a call, hours before it went live, from the US financial markets watchdog (SEC), who raised questions about a review of its accounts for fiscal years 2019 and 2020.
On Tuesday, Credit Suisse acknowledged “substantial weaknesses” in its internal controls for financial reporting in its annual report, sparking annoyance among investors at the expense of the stock price.
On Wednesday, the fall in the action accelerated following declarations by its Saudi shareholder who refused to return to the pot to bail out the bank, which triggered a panic movement.
(With AFP)
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