Arab Press

بالشعب و للشعب
Saturday, May 31, 2025

Credit Suisse has stumbled from one crisis to another - but the panic is possibly overdone

Credit Suisse has stumbled from one crisis to another - but the panic is possibly overdone

Senior executives at the bank appear to have spent most of the weekend trying to reassure clients and investors of its financial health, according to a report.

It never rains but only pours at Credit Suisse.

Switzerland's second largest lender has stumbled from one crisis to another in recent years.

There was the corporate spying scandal three years ago in which the bank was accused of hiring a private detective after one of its former executives had defected to a rival.

Shortly afterwards, the bank lost $5.5bn from its exposure to the collapsed hedge fund manager Archegos Capital, while it also suffered losses related to the collapse of the supply chain finance group Greensill Capital.

Other embarrassments included a string of fines for making fraudulent loans - nicknamed 'tuna bonds' - to the government of Mozambique between 2012 and 2016.

After these various setbacks Credit Suisse appeared to have pulled off a considerable coup when, in April 2021, it hired Antonio Horta-Osorio, the highly regarded former chief executive of Lloyds Banking Group, to become its new chairman. Investors were delighted when he promised to rebuild the bank's reputation.

Unfortunately, in January this year, he was forced to resign after an internal investigation revealed he had broken COVID quarantine rules to attend the Wimbledon tennis championships and had also used the bank's private jet to take a holiday to the Maldives.

He was followed out of the door in July this year by Thomas Gottstein, the chief executive, who resigned for what he described as "personal and health-related considerations".

His successor Ulrich Korner, the bank's fourth chief executive in just 17 years, has promised a major restructuring announcement before the end of the month in an attempt to cut costs and stem the flow of red ink that has characterised recent results.

The bank has reported a loss in five of the last seven quarters and in each of the last three due, chiefly, to issues in its investment banking division.

Ulrich Korner, the bank's fourth chief executive in just 17 years


Mr Korner, nicknamed 'Uli the Knife' for his cost-cutting prowess, ought to have represented a clean break with the past.

Unfortunately, according to the Financial Times, he appears to have spent most of the weekend - along with other senior executives at the bank - trying to reassure clients and investors about the bank's financial health.

Mr Korner sent an internal memo to colleagues on Friday afternoon, which promptly leaked, in which he urged them to "remain focused amid the many stories you read in the media" and told them not to confuse the bank's weak share price performance - the shares are down 61.5% so far this year following a 5% decline this morning - with its "strong capital base and liquidity position".

That does not appear to have calmed nerves over the bank's financial health.

Apart from the latest lurch in Credit Suisse's share price to a new all-time low - the bank is now valued at less than its book value - there has been a spike in credit default swaps (the instruments investors use to insure themselves against a potential default) of Credit Suisse. Rumours abound that the bank is also preparing to tap investors for capital.

Is the panic being overdone? Possibly. Credit Suisse has a reasonably strong capital position and certainly one that bears no comparison with those of the lenders that collapsed or required rescuing during global financial crisis.

It is why various market commentators have been at pains today to stress that this does not appear to be a so-called 'Lehman moment'.

But it is a fact that Credit Suisse's funding costs have risen, gnawing away at its profitability, following downgrades in its credit rating.

The irony is that Mr Gottstein and his predecessor at Credit Suisse, the much-respected former Prudential chief executive Tidjane Thiam, had done much work to try and reshape Credit Suisse following the financial crisis.

A conscious decision was taken, with the backing of the Swiss government, to reduce the size of the lender's investment banking division and to focus on wealth management.

But the scandals have kept on coming. Shortly before Mr Gottstein resigned, the bank became the first Swiss domestic lender to be fined for a corporate crime, its punishment relating to its failure to stop money laundering by Bulgarian drug dealers between 2004 and 2008.

The woes of this bank matter. Credit Suisse, whose ambassadors include the tennis superstar Roger Federer, is one of just 30 lenders on the list of 'Global Systemically Important Banks' published by the Financial Stability Board (the multinational body that promotes global financial stability) which means, in the terminology adopted around the time of the financial crisis, that it is too big to fail.

It is also a huge employer in the UK. Of the bank's 45,000 employees globally some 6,000 are here, the majority working at its offices at Canary Wharf, which are also home to an art collection that reflects the bank's lavish patronage of the sector.

It seems highly likely that if the restructuring planned by Mr Korner is as radical as is being rumoured - and as radical as those shareholders who may be tapped for cash are demanding - then the bank may be employing somewhat fewer people in both London and New York in the near future.

Comments

Oh ya 3 year ago
Remember folks you never show the sheep a vodeo of a sheep slaughter house before you load them up and take them in. You show them nice green pastures with a beautiful creek. Be calm they say as the big knife slits the throat

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
Head of Gaza Aid Group Resigns Amid Humanitarian Concerns
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Netanyahu Accuses Starmer of Siding with Hamas
Calls Grow to Resume Syrian Asylum Claims in UK
UAE Offers Free ChatGPT Plus Subscriptions to Citizens
Denmark Increases Retirement Age to 70, Setting a European Precedent
Iranian Director Jafar Panahi Wins Palme d'Or at Cannes
Israeli Airstrike Kills Nine Children of Gaza Doctor
Lebanon Initiates Plan to Disarm Palestinian Factions
Iran and U.S. Make Limited Progress in Nuclear Talks
Trump Administration's Tariff Policies and Dollar Strategy Spark Global Economic Debate
OpenAI Acquires Jony Ive’s Startup for $6.5 Billion to Build a Revolutionary “Third Core Device”
Turkey Weighs Citizens in Public as Erdoğan Launches National Slimming Campaign
UK Suspends Trade Talks with Israel Amid Gaza Offensive
Iran and U.S. Set for Fifth Round of Nuclear Talks Amid Rising Tensions
Russia Expands Military Presence Near Finland Amid Rising Tensions
Indian Scholar Arrested in Crackdown Over Pakistan Conflict Commentary
Israel Eases Gaza Blockade Amid Internal Dispute Over Military Strategy
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
Mount Lewotobi Laki-Laki Erupts Again, Spewing Ash Cloud over Flores Island
Indian jet shootdown: the all-robot legion behind China’s PL-15E missiles
The Chinese Dragon: The True Winner in the India-Pakistan Clash
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
The Spanish Were Right: Long Working Hours Harm Brain Function
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
US and UAE Partner to Develop Massive AI Data Center Complex
Apple's $95 Million Siri Settlement: Eligible Users Have Until July 2 to File Claims
US and UAE Reach Preliminary Agreement on Nvidia AI Chip Imports
President Trump and Elon Musk Welcomed by Emir of Qatar Sheikh Tamim with Cybertruck Convoy
Strong Warning Issued: Do Not Use General Chatbots for Medical, Legal, or Educational Guidance
NVIDIA and Saudi Arabia Launch Strategic Partnership to Establish AI Centers
Trump Meets Syrian President Ahmad al-Shara in Historic Encounter
US and Saudi Arabia Sign Landmark Agreements Across Multiple Sectors
Why Saudi Arabia Rolled Out a Purple Carpet for Donald Trump Instead of Red
Elon Musk Joins Trump Meeting in Saudi Arabia
Trump says it would be 'stupid' not to accept gift of Qatari plane
Quantum Computing Threatens Bitcoin Security
Michael Jordan to Serve as Analyst for NBA Games
Senate Democrats Move to Censure Trump Over Qatar Jet Gift
Hamas Releases Last Living US Hostage from Gaza Amid Ongoing Conflict
×