Analysis: Bosses will have to prove their aversion to dubious
wealthy clients if they are to regain trust of markets and regulators
Credit Suisse had a message for investors during
its recent earnings call. The bank was planning to change course after a
tumultuous 12 months in which it was embroiled in the collapse of the
US hedge fund Archegos and the supply-chain finance company Greensill
Capital.
“This will not be a quick fix, and we
expect 2022 will be a transition year,” the chief executive, Thomas
Gottstein, said on a conference call on 10 February. “But we have made
clear progress in creating the conditions for a much more stable and
predictable bank.”
More
“predictable”, in banking parlance, was code for reining in its riskier
investment bank – which offers trading, fundraising services and deal
advice to firms – and pivoting towards a more stable source of income:
wealth management.
Yet
that pillar of Credit Suisse’s business – cultivating rich clients for a
range of banking services – is precisely what has come under the
spotlight in the revelations in the Suisse secrets project.
A
massive leak has revealed that Credit Suisse harboured the hidden
wealth of clients involved in torture, drug trafficking, money
laundering, corruption and other serious crimes. The revelations point
to apparently widespread failures of due diligence by the lender,
despite repeated pledges to weed out dubious clients and stamp out illicit funds.
In
response, Credit Suisse said it was unable to comment on specific
clients but “strongly rejects the allegations and inferences about the
bank’s purported business practices”, which it said were “based on
partial, selective information taken out of context, resulting in
tendentious interpretations of the bank’s business conduct”.
However,
the simultaneous disclosures by 48 media organisations have raised
painful questions for the bank. For anyone who has followed the string
of scandals in recent years, they will have a familiar ring. …
