CREDIT SUISSE

KEY BACKGROUND

Though the collapse of SVB and Signature put a spotlight on Credit Suisse, the
three’s problems aren’t connected. Credit Suisse has been involved in multiple
scandals that have rattled investors in recent years, including the
mismanagement of funds, which was uncovered in its 2022 financial report.
The bank closed the 2022 fiscal year with a loss of nearly $8 billion, its biggest
loss since the 2008 global financial crisis. The bank was convicted in June
2022 of failing to prevent money laundering by a Bulgarian cocaine trafficking
gang. The Swiss government claimed the gang washed millions of dollars
through the bank and fined Credit Suisse $2.1 million and ordered it to pay the
Swiss government $20 million. In March 2022, a Bermuda court ruled the
bank owed former Georgian Prime Minister Bidzina Ivanishvili and his family
around $500 million in damages from Credit Suisse’s local life insurance
company. The court decided former Credit Suisse adviser, Pascale Lescaudron,
committed a long-running fraud against the family. Though Credit Suisse
appealed the decision, it believes the case will cost around $600 million. In
2020, Credit Suisse’s Chief Executive Tidjane Thiam was forced to resign after
it was unveiled the bank hired private detectives to spy on its former head of
wealth management once he left to join a rival bank. Other scandals also
contributed to what Peter Boockvar, chief investment officer of Bleakley
Financial Group, told CNN was Credit Suisse’s “slowing-moving car crash.”

KEY FACTS

1. Following an announcement the Swiss National Bank would loan Credit

Suisse up to $54 billion, shares rose as much as 33% on Thursday, settling on
around a 17% gain as investors rallied around the central bank's efforts to help
Credit Suisse avoid a potential collapse.

2. The sudden stock surge is a stark difference from the bank’s seven-day
losing streak, when shares were halted Wednesday because they fell to as
much as 21%.
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3. The chaos broke out following Credit Suisse’s Tuesday announcement,
stating it found “material weakness” in its 2021 and 2022 financial reporting
process.
4. After the lender shared the weakness found in its 2021 and 2022 reporting
process (which includes lack of effective risk assessment to identify
misstatements in its financial reporting), the Saudi National Bank—Credit
Suisse’s biggest backer—said it wouldn’t buy more shares in the Swiss bank.

5.Then the collapse of Signature and Silicon Valley Bank—two smaller regional

lenders—sent panic throughout the investor world as concerns arose for Credit
Suisse because, as Arthur Wilmarth, professor at the George Washington
School of Law, told CNN, the collapse of Signature and SVB was a signal
trouble could “spread to banks of a very large size.”

6. Credit Suisse is known as a “global systemically important bank,” a bank

whose risk profile is deemed to be of such importance that its failure could
trigger a wider financial crisis, so its potential collapse would be detrimental
to the global economy.