China Fund News reporter Ivan
Credit Suisse, Switzerland's second-largest bank, which was mired in scandals last year, such as the Greensill-related supply chain finance fund explosion, the hedge fund Archegos Century explosion, and the bribery of loans, seems to have more scandals this year.
Recently, the international bank has been accused of opening accounts with more than 18,000 criminals, human rights abuses or sanctioned people, involving an amount of more than 100 billion US dollars.
It was exposed to criminals and sanctioned people to open accounts
Credit Suisse responded: It's all old
According to the Organized Crime and Corruption Reporting Project (OCCRP), a foreign media-quoted investigative organization, Credit Suisse has more than 18,000 accounts held by criminals, human rights violators or sanctioned persons, which were opened from the 1940s to the 2010s. In total, these accounts involve 30,000 individuals and corporate entities, as some accounts are jointly controlled by multiple clients.
According to the documents, the account holders include Yemeni spy chiefs accused of torture, Venezuelan officials involved in corruption scandals, leaders of Filipino human trafficking syndicates, Balkan drug cartels, and the son of former Egyptian dictator Hosni Mubarak.
In addition, according to documents provided to the media by whistleblowers, the average of the highest assets in these accounts was 7.5 million Swiss francs, and the total amount of funds involved was more than $100 billion.
(The breaking news document calls Credit Suisse a "bank of spies" and points to the fact that some spies of the terrorist group and their family members have accounts with Credit Suisse Source: OCCRP allegations report page)
According to published data, the number of accounts opened between 2007 and 2008 peaked, followed by a peak in 2014, when Switzerland introduced a law that would automatically exchange tax-related data of foreign citizens (Common Reporting Standard CRS) to a subset of countries.
Thousands of accounts in the leaked data came from Egypt and Ukraine, all of which were countries that were not part of the CRS.
It should be emphasized that opening a Swiss bank account is not against the law, and the investigation focuses on transactions between Credit Suisse and well-known criminal group leaders and corrupt officials.
Paul Radu, co-founder of OCCRP, said in a statement: "I often see criminals and corrupt politicians who can do business as usual under any circumstances because they are confident that their ill-fated fortunes will be protected. Our investigations have uncovered how these people have ignored their crimes and bypassed regulation, to the detriment of democracy and the people of the world. ”
According to the OCCRP's statement, the pretext of protecting financial privacy simply obscures the shameful role of Swiss banks as collaborators in tax evaders. Whistleblowers at Credit Suisse say the situation breeds corruption and prevents developing countries from getting much-needed tax revenues.
The New York Times quoted a former head of the Swiss anti-money laundering agency as saying that although Swiss banks are known for their strict secrecy laws for protecting customers in Switzerland, they should not accept funds related to criminal activities, which are largely unenforced.
Credit Suisse urgently denied the allegations, saying that most of the reports involved past events and were "partial, inaccurate or selective" information.
Credit Suisse said in a nearly 400-word statement on Sunday (Feb. 20) local time that it "strongly denies" the allegations against its business practices.
Credit Suisse said the questions submitted were primarily historical, in some cases dating back to the 1940s, and that the descriptions of those issues were based on partial, inaccurate or selective information that was out of context and led to a tendentious interpretation of banking practices.
Credit Suisse also said that about 90 percent of the compromised accounts had been closed or were in the process of being closed before the media investigation began. It is "reassuring" that the remaining accounts have been properly vetted. Credit Suisse added that it could not comment on individual customers and had taken action "at the relevant time" to deal with improper customers.
(Credit Suisse Bank Response Source: Credit Suisse Media File)
The negative storms continue
In the fourth quarter of 2021, a single quarter suffered a huge loss of 15 billion yuan
On February 10, local time, Credit Suisse released the fourth quarter of 2021 financial report. Credit Suisse reported a net loss of about CHF 2.007 billion (about RMB15 billion) in the quarter.
According to the earnings report, Credit Suisse's net revenue in the last quarter fell 12% year-on-year, and Credit Suisse's loss was mainly affected by the sharp decline in its investment banking revenue, and the investment banking business revenue fell by 31%. In addition, legal expense provisions for a series of explosions such as Archegos have also affected profits. Credit Suisse disclosed that the special loss in response to major events for the year was as high as CHF 7.1 billion, and the Archegos incident alone had lost CHF 4.8 billion. Excluding a single special item, Credit Suisse's pre-tax profit increased by 51% year-on-year last year, but adjusted pre-tax profit in the fourth quarter still fell 62% year-on-year to only CHF 328 million.
At the same time, operating expenses rose by 20%. The earnings report reported a full-year loss of CHF 522 million.
Thomas Gottstein, CEO of Credit Suisse, said: "In the last three quarters of last year, our risk appetite was limited across all divisions as we took decisive action to strengthen our overall risk and control base and continue to implement our remedial measures, including on the issue of supply chain finance funds, where our priority was to return cash to investors. ”
As for the full year 2021 results, Credit Suisse turned a profit into a loss last year with a loss of CHF 1.6 billion, compared to a profit of CHF 2.7 billion in 2020.
(Credit Suisse Bank 2021Q4 Financial Report Source: Credit Suisse Financial Report)
As for earnings guidance, Credit Suisse pointed out that 2022 is a year of transformation for the bank, so the pre-tax profit in the first quarter of this year will continue to decline, and this year's revenue will be further dragged down by corporate restructuring and increased compensation costs.
Credit Suisse's stock closed down 9 percent the day after earnings, while its shares have fallen nearly 35 percent since last year. On a longer term, its share price has evaporated by nearly 80% in the past 10 years.
(Credit Suisse stock price chart for the past year Source: investing)
(Credit Suisse shares have evaporated nearly 80% in the past decade, source: Yahoo Finance)
Scandals continue to occur, and management changes are sudden
2022 is off to a bad start
For much of the past decade, the world's financial giant has gone through crises after crisis and acknowledged its role in helping customers launder money, avoid taxes on assets and aid corruption.
The start of 2022 is also very unfavorable. Antonio Horta-Osorio, who has been with him for less than a year, abruptly announced his resignation as chairman in January after being investigated internally by Credit Suisse for twice being accused of violating COVID-19 rules.
It is worth noting that Ossolio, who just took office last April, was himself the "firefighting chairman", and after the ten-year tenure of his predecessor Urs Ronell was over due to the CEO spy scandal, archegos explosion and Greenshill supply chain problems that caused Credit Suisse's huge reputation and economic losses, Osorio shouldered the responsibility of leading Credit Suisse out of trouble and back on track.
However, even after leaving office, Osorio said that he is still proud of the strategic transformation he led the company during his tenure and believes that Credit Suisse is now on the right track.
(Notice of Senior Management Change Source: Credit Suisse Bank official website)
As Osorio's successor, the new chairman, Axel Lehmann, also said that the existing transformation strategy is in the right direction and will embed a stronger risk control culture within the company.
In addition, Lehmann stressed that in addition to restructuring Credit Suisse's corporate culture, it will continue to promote wealth management as its core business. According to the financial report, even though Credit Suisse's overall earnings were in the fourth quarter of last year, the wealth management business still increased by 2% year-on-year to CHF 3.2 billion.
In addition, Credit Suisse has recently been accused of being involved in a Bulgarian money laundering case, even though the bank denied the allegations.
In 2014, Credit Suisse admitted to helping Americans file false tax returns and agreed to pay $2.6 billion in fines and damages. In 2021, the bank agreed to pay $475 million to compensate for its role in a bribery scheme in Mozambique.
Edit: Xiao Mo
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