Special report
Out of credit
Once one of Europe’s premier banks, with a history stretching back more than 150 years, the humiliating collapse of Credit Suisse feels like a watershed moment in European banking. Yet if the
fi nal catastrophe was sudden, it’s clear that the Swiss institution was struggling for years, with spying and Covid scandals just two of its longstanding problems. How, then, did the bank survive unreformed for so long, especially in the post-2008 world? And does the debacle have broader implications for Swiss banking – a country long reliant on a reputation for sober probity? Ellys Woodhouse speaks to Marcel Rohner, chairman of the Swiss Bankers Association (SBA), and Arturo Bris, professor of fi nance at the International Institute for Management Development, to learn more.
P
recision and accountability are Swiss specialities: think Rolex, the Swiss Army Knife, the Matterhorn shapes of Toblerone bars. This is a society built on an elegant system, full of checks and balances, from its government to its workforce to its perfectly efficient public transport system. While cliches and generalisations about countries rarely hold up, Switzerland’s reputation as one of, if not the, strongest nation in the world, has long been considered untarnishable – that was until the collapse of its second-largest bank.
And if it only took a few days in March to finally go,
it’s fair to say that Credit Suisse hadn’t been on its best behaviour for years. Most analysts start their timeline of collapse from February 2020, when Credit Suisse’s then-CEO Tidjane Thiam resigned following his involvement in a spying scandal the previous year. The collapse of Archegos Capital, the US family investment fund, as well as British supply-chain finance firm Greensill Capital the following year, triggered a pre-tax
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loss of almost $1bn for the beleaguered Swiss giant. While an independent investigation would find nothing fraudulent or illegal occurred on behalf of the bank, it did rule that Credit Suisse executives had failed to “effectively manage risk” – striking another blow to the firm’s reputation. When then-chairman Antonio Horta-Oscorio was forced to resign from the board in January 2022, after breaching Swiss and British Covid quarantine protocols to watch a tennis match at Wimbledon, it was no wonder the bank had started to lose the little support it had left from clients. By that summer, rumours were swelling that the bank was close to disaster, prompting clients to pull 110bn CHF ($119bn) of funds in the final quarter of 2022. After weathering the rains of recent years, it would only take one weekend for the flood to finally come. “Even though the bank was trying to change their culture, they never managed,” explains Arturo Bris, professor of finance at the International Institute for Management Development (IMD) and the director of
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