Credit Suisse faces fresh scrutiny over culture after client data leaks
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At its Zurich headquarters, the logo of Swiss bank Credit Suisse can be seen. March 24, 2021.
Arnd Wiegmann | Reuters
LONDON — Credit SuisseCurrently under fresh scrutiny by the Swiss regulators as well as the European Parliament. leaked data purported to show the bankfor many decades had provided support to human rights abusers and corrupt politicians as well as businessmen subject to sanctions.
After a thorough investigation, the Swiss bank denied all wrongdoing. It said that it strongly rejected “strongly reject” any allegations made by several global media outlets. Before being discovered by the Organized Crime and Corruption Reporting Project and other news agencies, the leakage of client information was first reported to a German newspaper.
Credit Suisse stated that the report entitled “Suisse Secrets” detailed historical matters. It was also based on partial, inaccurate or selective information which were taken out of context. This resulted in tendentious interpretations about the bank’s business behavior.
“Approximately 90% (or more) of reviewed accounts have been closed today or are in process of closing prior to receiving the press inquires. This includes over 60% that were closed before 2015.
Swiss regulator FINMA claimed it knew about the articles. However, they couldn’t comment individually.
“We can confirm we have been in contact with the bank regarding this matter. Since years, our supervision activities have been focused on compliance with money laundering regulations. “We refer to FINMA’s measures and procedures within the context of fighting money laundering in the recent years,” FINMA said.
Meanwhile, the European People’s Party (EPP) — the conservative grouping commanding the largest number of seats in the European Parliament — on Monday urged the European Commission to “re-evaluate Switzerland as a high-risk money-laundering country,” suggesting it could be included on the EU’s blacklist for countries notorious for laundering dirty money.
Markus Ferber is the coordinator for economic affairs at EPPs. He stated, “The Swiss Secrets’ findings point out massive failures of Swiss banks when it come to the prevention money laundering.”
Switzerland becomes high-risk when its banks do not adhere to international anti-money laundering regulations.
its recent earnings reportIn the aftermath resignation of its former chairman Antonio Horta-Osorio – who was found to have broken Covid-19 quarantine rules on multiple occasions – Switzerland’s second-largest bank had emphasized focus on overhauling its corporate culture.
In the fourth quarter 2021, the bank suffered from high litigation costs as a result of its continuing involvement in collapsed companies. U.S. hedge fund Archegos Capital insolvent supply chain finance company Greensill.
Credit Suisse came up with a plan to leave aside “major litigation provisions” of 1.1 million Swiss francs ($1.2 Billion), and posted a loss of 1.57billion Swiss francs during the year 2021.
Thomas Gottstein, the newly appointed CEO of Swiss bank Credit Suisse, attends an interview at Reuters, Zurich, Switzerland, February 7, 2020.
Arnd Wiegmann | Reuters
Credit Suisse recently was the first Swiss bank that faced criminal charges. The case involves millions of Euros in alleged money laundering to drug gangs.
An accused banker of money laundering stated to the court that Credit Suisse was informed of the murders of a Bulgarian mafia group and the cocaine trafficking, but continued to manage the cash. Credit Suisse and the banker both denied any wrongdoing.
FINMA completed an investigation in October 2021 into a variety of anti-money laundering problems dating back to decades prior to 2014 and others between 2016 and 2019. The group was subject to a series of measures that were imposed by FINMA and are being monitored.
Credit Suisse has suffered from scams over the years. Former CEO Tidjane Thiam resigned in early 2020Following a bizarre spying incident that led to the death of a contractor, and the dismissal of Pierre-Olivier Bouee as its COO.
Horta Osorio, who was hired to fix the corporate culture ship, had to step down. CNBC’s Thomas Gottstein, CEO of the bank, stated that repairing risk management and control was his top priority after a difficult year.
“Extremely poor risk management”
Credit Suisse stock has fallen more than 9.5% since the beginning of this year and is trading at a discount to its peers at around 0.4% below the European sector average.
DBRS Morningstar covers Credit Suisse stock and told CNBC Monday that recent developments “highlight additional risk management deficiencies at Credit Suisse” including Anti Money Laundering procedures, lack of internal controls, and management accountability.
Maria Rivas from DBRS Morningstar was senior vice president financial institutions. She told CNBC that “we consider the news adds on to the significant failings observed in 2021. We point out extremely weak risk management, controls at the Group Level and across the different Businesses, to now include Wealth Management. After the Archegos Issue in Investment bank, and the Supply Fund Chains issues in Asset Management,” Rivas said.
This is yet another success for CSG, the new Chairman, and his management team. They are trying to get a fresh start.
Rivas said that, despite the new bank leadership’s efforts to overhaul the bank’s culture of risk and controls and the complex global organization it is part of, such changes may “take many years” because they are so large and complicated.
CSG could face further consequences if the breach of Swiss bank secrecy is found under article 47. This is because it is a Federal crime to divulge information and activity from clients banks domestically to foreign agencies.
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