Factbox: Spies, Lies and Chairman’s Exit: The Credit Suisse Scandals

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The logo of Swiss bank Credit Suisse is seen at a branch in Zurich, Switzerland, 3 November 2021. REUTERS/Arnd WIegmann

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Jan 17 (Reuters) – Credit Suisse (CSGN.S) chairman Antonio Horta-Osorio has resigned after violating COVID-19 quarantine rules, the bank said on Monday, raising questions about the new strategy of the embattled lender trying to bounce back from a string of scandals.

The abrupt move comes less than a year after Horta-Osorio was brought in to help clean up the bank’s corporate culture, which has been marred by its stake in collapsed investment firm Archegos and insolvent supply chain finance firm Greensill Capital.

The scandals at the second largest Swiss bank in recent years, Horta-Osorio said after he joined, were the worst he had experienced in his career.

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Here are the main crises that have hit the bank in recent years:

CHAIRMAN EXIT

The personal conduct of Horta-Osorio, who came to him from Britain’s Lloyds Bank (LLOY.L) in April 2021 and was tasked with repairing the bank, has come under scrutiny as he was reportedly attacked twice in the past year violated COVID-19 quarantine rules.

The bank said Horta-Osorio resigned following an investigation commissioned by the board.

Credit Suisse announced that board member Axel Lehmann has taken over the presidency with immediate effect. Continue reading

TUNA BONDS SCAM

Credit Suisse pleaded guilty to defrauding investors over an $850 million loan to Mozambique intended to fund a tuna fishing fleet and is paying US and UK regulators $475 million to settle the case as part of an im to settle the agreement announced in October.

About $200 million of the loan was kickbacked to Credit Suisse bankers and Mozambican government officials. The bank was aware of a huge shortfall between the funds raised and the value of the boats purchased, but failed to disclose this to investors when the loan was restructured in 2016, regulators said.

Credit Suisse also brokered a loan that was kept secret from the International Monetary Fund (IMF). When Mozambique admitted $1.4 billion in secret loans, the IMF withdrew its support and sent the South African country’s economy into a tailspin.

ARCHEGOS STANDARD

Credit Suisse lost $5.5 billion when US family office Archegos Capital Management defaulted in March 2021.

The hedge fund’s heavily leveraged bets on certain tech stocks backfired, and the value of its Credit Suisse portfolio plummeted.

An independent report on the incident criticized the bank’s behavior, saying its losses were the result of a fundamental failure in management and control of its investment bank, and particularly its prime brokerage arm.

According to the report, the bank was focused on maximizing short-term gains and failed to curb Archegos’ insatiable risk-taking despite numerous red flags questioning the competence of its risk staff.

GREENSILL FUND Slump

Credit Suisse was forced to freeze $10 billion in supply chain finance funds in March 2021 when British financier Greensill Capital collapsed after losing insurance coverage for debt issued against its loans to companies.

The Swiss bank had sold Greensill’s billions of dollars in debt to investors, assuring them in marketing materials that the high-yield bonds were low-risk because the underlying credit exposure was fully insured.

Several investors have sued the Swiss bank over the funds associated with Greensill. The bank said on September 27 it had recovered and returned about $6.3 billion to investors, but warned it could struggle to recover $2.3 billion of the total.

espionage scandal

Credit Suisse chief executive Tidjane Thiam was forced to resign in March 2020 after an investigation revealed the bank had hired private investigators to spy on its former wealth manager, Iqbal Kahn, after he joined arch-rival UBS (UBSG.S) had changed.

Credit Suisse repeatedly downplayed the incident as an isolated case.

In October, however, the Swiss financial regulator (FINMA) said Credit Suisse misled them about the extent of the espionage. The bank planned seven different espionage operations between 2016 and 2019 and carried out most of them.

In a rare rebuke, it was said that there were serious organizational flaws at Credit Suisse and that the bank had even tried to cover its tracks by rigging an invoice for surveillance.

In response, Credit Suisse said it condemned the espionage and had taken “decisive” steps to improve its governance and strengthen compliance.

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Reporting by Scott Murdoch and David Clarke; Edited by Sumeet Chatterjee and Himani Sarkar

Our standards: The Thomson Reuters Trust Principles.

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