The takeover of Credit Suisse by UBS has more than a flavour of the Lloyds Bank Group ‘shot-gun wedding’ with HBOS in 2009: one financial services giant rescuing another in dire straits with a central bank and government lurking in the background, thumbscrews in pocket. The interesting thing though is that UBS’s overall strategy appears to be very different to that of LBG. The Credit Suisse name will disappear, the investment banking arm streamlined, and the problem parts of the overall business will be placed in a ‘bad bank’. Being so ruthless and getting rid of the brand that was already severely damaged by Greensill was an obvious step to take but it’s also a good way to be seen to be proactive in advance of any regulatory enquiry. One wonders how much LBG rues the takeover of HBOS and the decision to continue the use of the Halifax brand thereafter: the decision to discontinue individual investigations into senior management came only last year. For UBS, it must hope that plus ça change is not a phrase that comes to be associated with this Swiss marriage.
Credit Suisse, one of the largest banks in Switzerland, has had a series of scandals and issues that have rocked the institution. From the Archegos Capital Management fiasco to the Greensill Capital collapse, the bank has been dealing with a series of high-profile problems that have damaged its reputation and raised serious questions about its risk management practices.
The Archegos Capital Management scandal was perhaps the most damaging of all. In March 2021, the family office of Bill Hwang, a former hedge fund manager, collapsed, causing huge losses for a number of banks that had lent money to Archegos. Credit Suisse was one of the banks hit hardest by the collapse, losing billions of dollars and causing significant damage to its reputation. The bank was criticised for its risk management practices and for not being able to foresee the potential risks associated with Archegos’ trading strategies.
Another issue that has plagued Credit Suisse is the collapse of Greensill Capital. The bank was a key backer of the supply chain finance firm, and when Greensill filed for insolvency in March 2021, Credit Suisse was left with a $10 billion exposure. The bank was also criticised for its role in helping Greensill package its loans into securities that were sold to investors, leading to accusations of conflict of interest.
These scandals were preceded by a number of high-profile departures from Credit Suisse, including its CEO, Tidjane Thiam, who resigned in February 2020 after a spying scandal involving the bank’s former head of wealth management. In April 2021, the bank’s investment banking chief, Brian Chin, also announced that he would be leaving.