The Rise and Fall of Credit Suisse: How Greed and Mismanagement Led to a Bank's Demise

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Credit Suisse, a 167-year-old Swiss bank, has been facing a crisis in recent years, with its share prices falling significantly in 2021 following losses linked to the collapse of investment funds Archegos and Greensill Capital. The bank's top management changes, multi-billion dollar losses, and uninspiring strategy are some of the reasons that have led to this crisis.

The situation has been exacerbated by the resignation of the bank's chairman, Antonio Horta-Osorio, in January 2022, just eight months after he was hired to fix the struggling bank. In July of the same year, new CEO and restructuring expert Ulrich Koerner unveiled a strategic review that failed to win over investors. An unsubstantiated rumor in the fall of an impending failure of the bank led to customers fleeing, adding to the bank's woes.

Credit Suisse confirmed in February that clients had pulled 110 billion Swiss francs ($119 billion) of funds in the fourth quarter of 2021, while the bank suffered its biggest annual loss of 7.29 billion Swiss francs since the financial crisis. In December, Credit Suisse had tapped investors for 4 billion Swiss francs.

On Wednesday, Saudi National Bank, the bank's top backer, told reporters that it could not give more money to the bank due to regulatory hurdles, although it was happy with the bank's turnaround plan. Credit Suisse shares have lost more than 75% of their value over the past twelve months.

To calm investors, Credit Suisse has said it would borrow up to $54 billion to shore up liquidity and investor confidence, but some analysts believe that this may not be enough to soothe investors. Winning the backing of strategic investors could be one option to shore up market confidence, and the bank counts Qatar Investment Authority and Saudi conglomerate Oyalan Group among its investors.

Divesting stakes in various assets is another option for Credit Suisse, as the bank owns an asset management business and a stake in SIX Group, which runs the Zurich stock exchange. The bank has pivoted to a strategy of catering to rich clients while cutting back on its volatile investment banking business and has already announced plans to spin it off.

Credit Suisse is one of the world's largest wealth managers and is one of 30 global systemically important banks, whose failure could cause ripples throughout the entire financial system. The bank has local Swiss bank, wealth management, investment banking, and asset management operations, with just over 50,000 employees and 1.3 trillion Swiss francs in assets under management at the end of 2022, down from 1.6 trillion a year earlier.

In conclusion, the situation at Credit Suisse highlights the risks of investing in a struggling company. Investors should stay informed about the situation, keep an eye on the latest news and updates, and consider seeking advice from a professional financial advisor before making any investment decisions. Diversifying your portfolio by investing in a variety of different assets and companies can help reduce your overall investment risk.


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