In the financial sector, customer confidence is always on the rise. “It is the main asset of the business”, say some managers and it is something that although in calm times it is already appreciated, when a storm breaks out it makes all its sense. As in any relationship, trust is an ethereal concept that takes a lot to build and can be lost very quickly.
This is not the case of Credit Suisse, which has been losing that confidence for some time. And we are talking about an entity with 167 years of existence that is part of the thirty banks considered systemic and, therefore, whose fall would have a considerable impact on the financial system at a global level.
What happened during the last week, with the massive withdrawal of its funds, has been the last of the many crises of confidence that this centenary bank has gone through. It has been an added crisis, not an exception. Since its birth in 1856, as a financier of Swiss railway development, the entity has gone from the top of the world of finance to the mud on numerous occasions.
Its founder, the industrialist Alfred Escher, came to be described as “king of Switzerland” for his great economic and political influence on the country’s growth. Under Escher, Credit Suisse grew to become one of the world’s most creditworthy financial institutions and one of the pillars of famed Swiss banking. As soon as World War I ended, it opened its headquarters in New York. Soon its international presence was key to the movement of capital that sought in Credit Suisse, as in the rest of its Swiss competitors, an always appreciated discretion. For example, it was one of the main banks that channeled Jewish capital when Hitler came to power in Germany.
And that was one of the first controversies that haunted the bank, when after the end of World War II, it was accused of appropriating the funds of its deceased clients. But what has really turned it into an entity with serious problems was the progressive lifting of banking opacity.
After the 2008 crisis, Swiss finance took steps to lift the veil of opacity. It was soon after, in 2014, that Credit Suisse faced one of its biggest corporate scandals. He pleaded guilty in the US to illegally allowing some US clients to evade their taxes. The bank paid a total of 2.6 billion dollars in fines to the country’s authorities. Since that year the stock market decline has been progressive.
The main contributors to the debacle have been its managers. In 2020, Credit Suisse CEO Tidjane Thiam resigned after it was confirmed that senior bank officials were implicated in two espionage cases, including former employees.
Added to these governance problems, in 2021, was the bankruptcy of the American hedge fund Archegos Capital. The economic impact was 5,500 million. The credibility was even higher. An external investigation revealed a risk policy with extremely lax controls. Since then, the main European and Spanish banks began to orderly cut ties with the Swiss entity. According to Reuters, the exposure of the Spanish banks does not currently reach one million euros. Less orderly was the outflow of funds in 2022 due to rumors of bankruptcy that took away 125,000 million euros. That year, the losses escalated to 7,400 million euros.
One of its longest-serving shareholders, the US investment manager Harris Associate, sold its entire 10% stake on March 6 due to a lack of confidence in its strategy and after persistent losses and an exodus of clients. The SVB had not yet gone bankrupt. Last Wednesday, with the crisis already unleashed in the US, it was the Saudi bank, the main shareholder with 9.8%, who refused to provide more funds. The die was cast.
