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 a fact that although it is already appreciated in times of calm, when a storm starts it takes on its full meaning. 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 for Credit Suisse, which has long since lost this trust. 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 the global level.
What has happened over the last week, with the massive withdrawal of its funds, has been the latest of the many crises of confidence that this century-old bank has gone through. It has been an added crisis, not an exception. Since its birth in 1856, as a financier of the 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 the “king of Switzerland” for his great economic and political influence on the growth of the country. With Escher, Credit Suisse grew to become one of the most solvent financial institutions in the world and one of the pillars of the prestigious Swiss bank. As soon as the First World War ended, he opened headquarters in New York. Soon its international presence was key to the movement of capital that was sought in Credit Suisse, as in the rest of its Swiss competitors, an always appreciated discretion. It was, for example, one of the main banks that channeled Jewish capital when Hitler came to power in Germany.
And this was one of the first controversies that threatened the bank, when after the end of the Second World War it was accused of appropriating the funds of its dead customers. But what has really turned it into an entity with serious problems was the gradual lifting of banking opacity.
After the 2008 crisis, Swiss finance took steps to lift the veil of opacity. It was shortly thereafter, in 2014, that Credit Suisse faced one of its worst corporate scandals. He pleaded guilty in the US to illegally allowing some US customers to evade taxes. The bank paid a total of $2.6 billion in fines to the country’s authorities. Since that year, the stock market decline has been progressive.
The main contributors to the defeat have been its managers. In 2020, Credit Suisse CEO Tidjane Thiam resigned after it was confirmed that senior bank officials were involved in two espionage cases, including former employees.
To these governance problems was added, in 2021, the bankruptcy of the American hedge fund Archegos Capital. The economic impact was 5,500 million. Credibility was even worse. An external investigation demonstrated 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 bank currently does not reach one million euros. Less orderly was the outflow of funds in 2022 due to bankruptcy rumors that took away 125,000 million euros. That year, losses escalated to 7.4 billion euros.
One of its longest-standing shareholders, 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 customer exodus. The SVB had not yet gone bankrupt. On Wednesday, with the crisis already unleashed in the US, it was the Saudi bank, the main shareholder with 9.8%, which refused to contribute more funds.
