Credit Suisse after Chiasso: management, supervision and reorganization

Responsibility at the top

The first question after April 1977 concerned the responsibility of the bank's leadership. The Kreditanstalt was then governed by a board of directors (Verwaltungsrat) under a chairman and managed by a general management (Generaldirektion) whose members shared responsibility for the bank's divisions and regions. Heinz R. Wuffli, a member of the general management, was the man whom the head of the UBS had warned about the Chiasso branch in January 1976. The board drew personal consequences, and the general management was reshaped. Le Temps, summarizing the company history, describes the departure of a generation of general managers who had been "always Swiss, Protestant and without university degrees".¹ The Federal Banking Commission, which had to decide whether the persons in charge still offered the guarantee of irreproachable business conduct required by Article 3(2)(c) of the Banking Act, noted in 1979 that "after the personnel consequences drawn by the board of the Kreditanstalt itself" the persons now on the board and in the general management gave no reason for doubts about their good reputation.²

The man who emerged from the crisis was Rainer E. Gut, who was then the spokesman of the general management. According to the company history summarized by Le Temps, he managed the crisis, rejuvenated and restructured the bank and then set it on a new course, including in the management of risk.³ The Historical Dictionary of Switzerland draws the same line. The Chiasso scandal, it says, led for a short time to a loss of confidence in the bank and "at the same time marked the strategic transition to an internationally oriented financial group".⁴

The Banking Commission's intervention

The Federal Banking Commission, the supervisory authority created by the Banking Act of 1934, had limited powers in 1977. It could order audits, require the replacement of persons who did not offer the guarantee of irreproachable conduct and, as a last resort, withdraw a banking licence. It could not impose fines. In the Chiasso case it ordered an extraordinary audit of the Kreditanstalt and examined the measures taken by the bank. It reported that the management had replaced the head of the internal audit and revised the bank's organizational and business regulations.⁵ The Commission also took the case as an occasion to reflect on the limits of external audit. A study group set up by the Federal Council in 1975 to examine a revision of the Banking Act was already considering the effectiveness of external audits, depositor protection, consolidated accounts and the principles of risk distribution.⁶

The Commission's analysis identified three failures. The first lay in the bank's internal control: the internal audit had covered the Chiasso branch only partly, and the head office had not checked the off-balance-sheet business conducted in the bank's name. The second lay in external audit, since the statutory auditors had never examined the Chiasso branch. The third lay in the bank's governance, because warnings had reached the general management without leading to action. Each of these failures pointed to a rule that would later become standard: complete audit coverage of branches, the recording of all guarantees and contingent liabilities, and a clear allocation of responsibility for following up warnings.⁷

Notes

1. Le Temps, "Grandes affaires économiques suisses (26)" (above) ("Heinz Wuffli, directeur général du CS"; "Exit des directeurs généraux toujours suisses, protestants, non universitaires"); EBK, Jahresbericht 1979 , 23 (below), for the personnel consequences drawn by the board. ↩
2. EBK, Jahresbericht 1979 , 23, https://www.finma.ch/FinmaArchiv/ebk/d/publik/bericht/pdf/jb79-d.pdf ("nach den vom Verwaltungsrat der SKA selbst gezogenen personellen Konsequenzen"), restating its report for 1977, 25. Federal Act on Banks and Savings Banks of 8 November 1934 (Banking Act, BankA), SR 952.0, Art. 3(2)(c) ("einen guten Ruf geniessen und Gewähr für eine einwandfreie Geschäftstätigkeit bieten"), https://www.droit-bilingue.ch/de-fr/9/95/952.0-3-10.html. ↩
3. Le Temps, "Grandes affaires économiques suisses (26)" (above) ("Rainer Gut, alors porte-parole de la direction, entre en scène, gère la crise, rajeunit et restructure la banque, puis la place sur une nouvelle voie, y compris dans la gestion du risque"). ↩
4. Baumann, "Schweizerische Kreditanstalt (SKA)", HLS (above): the scandal "führte kurzzeitig zu einem Verlust an Vertrauen in das Unternehmen und markierte zugleich den strateg. Übergang zum international ausgerichteten Finanzkonzern". ↩
5. EBK, Jahresbericht 1977 (above), 25: extraordinary audit; replacement of the head of the internal audit; revision of the organizational regulations. ↩
6. EBK, Jahresbericht 1977 (above), 11–12 and 17–18 (study group set up by the Federal Council in 1975; external audit; depositor protection; consolidation; risk distribution). ↩
7. The three failures follow EBK, Jahresbericht 1977 (above), 23–25; the link to later rules is the author's assessment. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.