Credit Suisse

Credit Suisse was a major global investment bank and financial services company founded and based in Switzerland. For over 167 years, it was a pillar of the Swiss financial centre and a systemically important financial institution worldwide. Its history was marked by global expansion and significant influence, but its final years were defined by severe financial losses, major scandals, and a crisis of confidence that culminated in its emergency takeover by its larger rival, UBS, in 2023.

History

The bank was founded in Zürich in 1856 by politician and industrialist Alfred Escher under the name Schweizerische Kreditanstalt (SKA) to finance the expansion of the Swiss railway network and the country's industrialization. It played a crucial role in funding major infrastructure projects like the Gotthard Railway. In the 20th century, it established its reputation in private banking and expanded internationally, opening its first foreign office in New York City in 1940. Major acquisitions fueled its growth, including the purchase of First Boston in 1988, which formed the foundation of its modern investment banking arm, Credit Suisse First Boston. Further expansion came with the takeover of Winterthur Group in 1997 and the integration of Donaldson, Lufkin & Jenrette in 2000. The bank weathered the 2008 financial crisis without a direct government bailout but required a capital injection from the Qatar Investment Authority and other investors.

Business operations

The bank operated through several core divisions. Its Swiss Universal Bank provided traditional banking services within its home market. The International Wealth Management and Asia Pacific divisions focused on private banking and wealth management for high-net-worth individuals globally. The Investment Bank offered services in capital markets, advisory, and sales and trading, with major hubs in London, New York City, and Hong Kong. The Asset Management unit handled investment products for institutional and private clients. Key operational and legal entities included Credit Suisse (Switzerland) Ltd and the Credit Suisse International branch in the United Kingdom.

Financial performance and challenges

Following the 2008 financial crisis, the bank faced persistent struggles with profitability and a series of risk management failures. It reported substantial losses, including a CHF 5.2 billion loss in 2022, driven by significant writedowns and client outflows. A major factor was its exposure to collapsed firms like Greensill Capital and Archegos Capital Management, the latter resulting in a $5.5 billion loss in 2021. These events severely damaged its reputation and led to a continuous withdrawal of client funds. Efforts to restructure under CEO Ulrich Körner, including a strategic pivot back toward wealth management and a capital raise from the Saudi National Bank, failed to restore market confidence.

Regulatory and legal issues

The institution was involved in numerous legal and compliance scandals across multiple jurisdictions. It pleaded guilty in 2014 to helping U.S. clients evade taxes in a case with the U.S. Department of Justice. It was also convicted in 2022 by Switzerland's Federal Criminal Court for failing to prevent money laundering linked to a Bulgarian drug trafficking ring. Other major cases included the Mozambique tuna bonds scandal, which involved settlements with regulators like the U.S. Securities and Exchange Commission and the UK Financial Conduct Authority, and ongoing litigation related to its dealings with the defunct supply chain finance firm Greensill Capital.

Acquisition by UBS

In March 2023, after a rapid collapse in its stock price and deposit flight triggered by market panic following the collapse of Silicon Valley Bank, Swiss federal authorities orchestrated an emergency sale to prevent a broader financial crisis. Competitor UBS agreed to acquire it for CHF 3 billion in a deal facilitated by the Swiss Federal Council, the Swiss Financial Market Supervisory Authority (FINMA), and the Swiss National Bank. The transaction, which included substantial government guarantees and liquidity support, was completed in June 2023, effectively ending its 167-year history as an independent institution and creating a consolidated banking giant in Switzerland.

Category:Banks of Switzerland Category:Companies based in Zürich Category:Financial services companies established in 1856