On the problems of Credit Suisse - part 1
Following the collapse (https://t.me/econopocalypse/148) of a number of American banks, the problems spread to Europe as well. Shares of Credit Suisse fell 30% yesterday en-forte-baisse_6165569_3234.html), which caused justified concern for the future of all European banks.
🔻What is Credit Suisse?
It is a Swiss investment bank and financial services company. The bank is engaged not only in lending, but also in risky investments. ▪️Credit Suisse's major shareholders include Saudi National Bank (9.88%), Qatar Investment Authority (5%), Harris Associates, Norges Bank Investment Management, BlackRock (5%) and Vanguard. ▪️The bank manages CHF 824.6 billion of total assets. The bank's liabilities amount to 752.4 billion Swiss francs. For comparison, the amount of assets managed by Credit Suisse exceeds Turkey's GDP or is approximately 50% of Italy's GDP. 🔻Risk Operations In its Q1 2021 earnings report, Credit Suisse disclosed a 4.4 billion Swiss franc ($4.7 billion) loss from the scandal (https://www.forbes.ru/investicii/464163-v-ssa -po-obvineniu-v-mosennicestve-arestovali-osnovatela-ruhnuvsego-archegos-capital) with Archegos - the hedge fund was accused of fraud, which caused many investors to lose money. However, these are not the final losses. Data on total losses are not yet available in open sources. Credit Suisse posted a net loss of CHF 3.3 billion in the fourth quarter of 2022, the worst annual loss since the 2008 global financial crisis. Naturally, this was reflected not only in the value of shares, but also in the probability of default (https://twitter.com/Schuldensuehner/status/1635944561074745347), which the market currently estimates at 38%. 🔻Problems with regulators Credit Suisse also ran into problems with local regulators. The Swiss Financial Market Supervisory Authority (FINMA) is investigating the bank for violations related to risk management, compliance and anti-money laundering. ▪️In recent years, Credit Suisse has experienced information leaks (https://www.finews.com/news/english-news/55789-credit-suisse-internal-leak-bonuses) that put the bank at risk (https://www .occrp.org/en/suisse-secrets/historic-leak-of-swiss-banking-records-reveals-unsavory-clients) fraud and corruption. The bank's internal investigation revealed that several employees were engaged in illegal activities, including facilitating money laundering and tax evasion. Credit Suisse is working with the US Attorney's Office and the Department of Justice through the Foreign Account Tax Compliance Act (FATCA) and the Financial Action Task Force (FATF) to address these issues. 🔻Compliance with sanctions against individuals and legal entities from Russia The bank was accused (https://www.bloomberg.com/news/articles/2022-04-30/credit-suisse-sued-over-alleged-dealings-with-russian-oligarchs) of violating US sanctions against Russia by facilitating transactions for individuals and legal entities under sanctions. Naturally, the bank denies any wrongdoing and states that it is in compliance with all applicable sanctions provisions. ▪️For investment bankers, working with troubled money is one of the main sources of income. For example, in Cyprus and the Baltics, local bankers have long used the opportunity to freeze the funds of troubled clients simply to maintain bank liquidity. This made it possible to report to local regulators without attracting borrowed funds. 🔻Switzerland is also well aware that clients with troubled money are less likely to move to another bank, they can be "divorced" to purchase various investment products from affiliated structures or simply freeze their deposits for an indefinite period
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It is a Swiss investment bank and financial services company. The bank is engaged not only in lending, but also in risky investments. ▪️Credit Suisse's major shareholders include Saudi National Bank (9.88%), Qatar Investment Authority (5%), Harris Associates, Norges Bank Investment Management, BlackRock (5%) and Vanguard. ▪️The bank manages CHF 824.6 billion of total assets. The bank's liabilities amount to 752.4 billion Swiss francs. For comparison, the amount of assets managed by Credit Suisse exceeds Turkey's GDP or is approximately 50% of Italy's GDP. 🔻Risk Operations In its Q1 2021 earnings report, Credit Suisse disclosed a 4.4 billion Swiss franc ($4.7 billion) loss from the scandal (https://www.forbes.ru/investicii/464163-v-ssa -po-obvineniu-v-mosennicestve-arestovali-osnovatela-ruhnuvsego-archegos-capital) with Archegos - the hedge fund was accused of fraud, which caused many investors to lose money. However, these are not the final losses. Data on total losses are not yet available in open sources. Credit Suisse posted a net loss of CHF 3.3 billion in the fourth quarter of 2022, the worst annual loss since the 2008 global financial crisis. Naturally, this was reflected not only in the value of shares, but also in the probability of default (https://twitter.com/Schuldensuehner/status/1635944561074745347), which the market currently estimates at 38%. 🔻Problems with regulators Credit Suisse also ran into problems with local regulators. The Swiss Financial Market Supervisory Authority (FINMA) is investigating the bank for violations related to risk management, compliance and anti-money laundering. ▪️In recent years, Credit Suisse has experienced information leaks (https://www.finews.com/news/english-news/55789-credit-suisse-internal-leak-bonuses) that put the bank at risk (https://www .occrp.org/en/suisse-secrets/historic-leak-of-swiss-banking-records-reveals-unsavory-clients) fraud and corruption. The bank's internal investigation revealed that several employees were engaged in illegal activities, including facilitating money laundering and tax evasion. Credit Suisse is working with the US Attorney's Office and the Department of Justice through the Foreign Account Tax Compliance Act (FATCA) and the Financial Action Task Force (FATF) to address these issues. 🔻Compliance with sanctions against individuals and legal entities from Russia The bank was accused (https://www.bloomberg.com/news/articles/2022-04-30/credit-suisse-sued-over-alleged-dealings-with-russian-oligarchs) of violating US sanctions against Russia by facilitating transactions for individuals and legal entities under sanctions. Naturally, the bank denies any wrongdoing and states that it is in compliance with all applicable sanctions provisions. ▪️For investment bankers, working with troubled money is one of the main sources of income. For example, in Cyprus and the Baltics, local bankers have long used the opportunity to freeze the funds of troubled clients simply to maintain bank liquidity. This made it possible to report to local regulators without attracting borrowed funds. 🔻Switzerland is also well aware that clients with troubled money are less likely to move to another bank, they can be "divorced" to purchase various investment products from affiliated structures or simply freeze their deposits for an indefinite period
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