INTRODUCTION
Credit Suisse is a global investment bank and financial services company based in Switzerland. It provides investment banking, private banking, asset management, and shared services. It is one of the nine global "Bulge Bracket" banks. It is known for strict bank–client confidentiality and banking secrecy. It has grown to become one of the biggest banks in Europe and the second-biggest bank in Switzerland. So why all of a sudden Credit Suisse is on the top of the news? Reasons for its Downfall 1. Money Laundering Charges Going back to the late 2020s, The bank was convicted of not preventing Money
laundering by Bulgarian cocaine trafficking gangs. Even after the Swiss prosecutors
claimed to find faults in the client relation management and anti-money laundering
rules, the bank and the convicted former employee denied all the charges.
2. Archegos Incident
In march 2021, Credit Suisse was shaken one more time as it lost $5.5 billion after the
collapse of Archegos Capital Management. The fund's highly leveraged bets on certain
technology stocks backfired, and the value of its portfolio with Credit Suisse plummeted.
3. Greensill Collapse
Losses kept soaring as they were stuck with another calamity, as Greensill Capital
comes down. Credit Suisse had lent billions to Greensill. When it collapsed, the bank
freezed $10 billion, preventing investors from pulling their money back at the moment.
Several investors sued Credit Suisse for this. They have returned around $7 billion
to the investors so far.
4. Spying Scandal
To put a cherry on top of this charade, then CEO Tidjame Thiam had hired private
investigators to spy on Iqbal Khan, the Head of Wealth Management who left for the
opposing firm. They tried to isolate this incident from the whole scandal to not
plummet down further. The bank condemned spying and responded to take effective
measures against this. In march 2020, they appointed a new Chief Executive, Ulrich Koerner. After this whole pile of
wrongdoings, the new CEO tries to calm the employees and the market down, after rumors hit that the bank was on the verge of collapse.
Condition of the Bank now
A year ago, Credit Suisse had a market cap of $22.3 billion. Today, its market value is only $10.4 billion and the shares have fallen 56.2%, to around $4. The bank's financials turned red in 2021 with a loss of $1.80 billion. If the bank collapses, its immediate impact will be on the global financial market. The collapse of a bank worth $830 billion, combined with the two years of losses due to COVID-19, and the recent Ukraine-Russia war… could lead directly into a global financial crisis.
Source: Google How does this affect India Credit Suisse’s operations in India are limited, and small compared to other foreign banks.
Foreign banks account for only 4.5% market share in loans and advances, though a global
crisis would also be a big concern for India
crisis would be a big concern for India too. CONCLUSION The bank has already issued orders to minimize their losses. The bank is changing its wealth
management system and transforming its investment banking division. The new CEO, Ulrich
Koerner is working on a plan which will be rolled out at the end of this quarter. Koerner is likely
to make significant changes in wealth and investment banking divisions with a plan to cut costs at all levels. Will Credit Suisse Collapse or the new chief will turn things around and bring back the peace?
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