Chiasso, April 1977: the bank within the bank

Texon and the Chiasso branch

Chiasso was an unlikely place for a banking crisis of national dimensions. The town lies directly on the Italian border, a few kilometres from Como and less than an hour by car from Milan. For decades its banks had lived from the flow of Italian money that crossed the border in suitcases, in car boots and through more sophisticated channels whenever Italian savers feared inflation, taxation or political instability. Italian exchange controls made most of these transfers illegal under Italian law. Under Swiss law they were not criminal, because Switzerland did not enforce foreign currency or tax legislation. The Chiasso branch of the Kreditanstalt was one of the largest recipients of this money, and its managers enjoyed a considerable degree of independence from Zurich.

The central figure was Ernst Kuhrmeier, who had risen through the branch to become its director and who in January 1975 was promoted to the rank of senior director.¹ In April 1961 a company named Texon Finanzanstalt had been established in Vaduz. Its founder was the Vaduzer Präsidial-Anstalt, one of the Liechtenstein trust companies that provided shell entities and nominee directors to clients from abroad.² Texon served as the vehicle through which the Chiasso branch placed the deposits of Italian clients. The clients believed that their money was held by the Kreditanstalt, and the branch issued them documents that reinforced this belief. In reality the funds were passed on to Texon, which invested them in Italian companies in sectors as varied as tourism, wine and toys. The Chiasso managers ran this structure as a banking business of their own, which the press later called “une banque dans la banque”.

The structure worked for as long as the Italian investments produced enough income to pay the interest promised to the depositors. After the oil crisis of 1973 and the recession that followed, many of the companies in the Texon portfolio fell into difficulty. According to the Liechtenstein historical lexicon, problems had in fact begun around 1969.³ The managers covered the growing gap with further deposits and with guarantees issued in the name of the Kreditanstalt, which the head office had never authorised. A report published by swissinfo on the twenty-fifth anniversary described Texon as a front company created without the knowledge of head office, whose purpose was the recycling of capital that was often illicit and that escaped Italian taxation. By 1977 its commitments were estimated at more than two billion francs.⁴

The volume of Italian money channelled through Texon amounted to around 2.2 billion francs. The Liechtenstein lexicon adds two further figures that show how deeply the scheme touched Swiss public finances. Texon had avoided around 190 million francs of Swiss withholding tax. In addition, it had evaded some 80 million francs of the negative interest that the Swiss National Bank imposed on foreign deposits in the 1970s to curb the appreciation of the franc.⁵ These evasions linked the Chiasso affair to the monetary policy of the time. At the very moment when the National Bank was trying to keep foreign money out of the country, one of the big banks was taking it in through a Liechtenstein conduit.

Warnings, discovery and disclosure

The Kreditanstalt did not discover the affair unaided. As early as 1968, a manager of the Union Bank of Switzerland is reported to have raised concerns. In January 1976 the Union Bank's senior management warned the Kreditanstalt's leadership that something was wrong in Chiasso. According to the account published in Le Temps, Philippe de Weck of the Union Bank passed that warning to Heinz Wuffli. The head office nevertheless took no decisive action until March 1977, when Robert Jeker, a member of the bank's management, uncovered the mechanism.⁶ Kuhrmeier resigned on 13 April 1977.

The disclosure followed the next day. On 14 April 1977, after informing the Swiss National Bank and the Federal Banking Commission, the Kreditanstalt announced the irregularities in a press communiqué. The bank's first estimate put the maximum loss at 250 million francs, which later proved to be far too low. The ordinary general meeting of shareholders had been held on 29 March 1977, only two weeks earlier, without any mention of the problem. The board therefore had to convene an extraordinary general meeting for 24 June 1977.⁷ The sequence of communiqués, each revising the previous one, damaged the bank's credibility almost as much as the losses themselves.

On 24 April 1977 Kuhrmeier and two other directors of the Chiasso branch were arrested.⁸ The affair quickly reached beyond the bank. In Ticino it touched the political class. According to a summary based on contemporary reports, Fabio Vassalli, a member of the cantonal government who had had dealings with Texon, was forced to resign in June 1977.⁹ In Liechtenstein, the members of the Texon board who had lent their names to the structure faced no penalty, although the affair set off a reform of Liechtenstein's criminal and company law in the following years.¹⁰

The reckoning: management, National Bank and courts

The most visible casualty in Zurich was Heinz Wuffli. He had only become chairman of the executive board of the Kreditanstalt in 1977, and he resigned on 10 May 1977 after around two months in office. Swissinfo's obituary on his death in August 2017 described him as a scapegoat who bore formal responsibility despite his short tenure. He later became chairman of the insurer Elvia.¹¹ The bank named Rainer Gut, who had handled the crisis communication, as his successor on 19 May 1977.¹² Gut would lead the bank for the next quarter century and turn it into the Credit Suisse Group. The chairman of the board also stepped down, according to the Liechtenstein lexicon.¹³

The National Bank's reaction showed how seriously the monetary authority took the risk of contagion. Together with the Swiss Bank Corporation and the Union Bank of Switzerland, the National Bank offered the Kreditanstalt a standby credit of three billion francs.¹⁴ The credit served above all as a signal to the markets. Because the Kreditanstalt was able to absorb the loss from its own resources, including its hidden reserves, the facility was never drawn, according to the English-language summaries of the affair.¹⁵ The National Bank's president at the time was Fritz Leutwiler. Under his leadership the bank drew a lesson that went far beyond the rescue: it pressed the banking industry to adopt binding rules of conduct on the acceptance of funds, which is the subject of the next section.

The size of the final loss is reported differently in the sources, which reflects both the difficulty of valuing the Texon assets and the difference between gross exposure and net loss. The communications analysis by Kaspar Silberschmidt gives a loss of 1.2 billion francs. The Liechtenstein lexicon puts it at around 1.4 billion francs, a figure that swissinfo repeated in 2026.¹⁶ Figures of 2.2 billion francs that appear in some accounts refer to the total volume of funds channelled through Texon. For a bank with the Kreditanstalt's balance sheet the loss was bearable, although it consumed a large part of the reserves that the bank had accumulated over decades. The Kreditanstalt took over Texon and liquidated its holdings, a process that lasted until the late 1980s.¹⁷

The criminal trial took place before the Ticino jury court from 28 May to 4 July 1979. On 3 July 1979 the court sentenced the defendants to four and a half years' imprisonment and a fine of 10,000 francs each. Kuhrmeier died shortly after the trial.¹⁸ In the civil proceedings joined to the criminal case, the Kreditanstalt obtained a joint award of damages of 20 million francs against those convicted. A separate dispute concerned the National Bank's claim for the negative interest evaded through Texon. In litigation that reached the Federal Supreme Court, the Kreditanstalt succeeded in reducing the National Bank's claim from 450 million francs to 37 million francs.¹⁹ The public, however, remembered the affair less for its legal outcomes than for what it revealed about the relationship between Swiss banks and foreign flight capital.

The political reaction was divided along familiar lines. According to the Année politique suisse for 1977, business circles and the parties of the centre-right attributed the affair to individual failures, whereas the left saw in it structural deficiencies of an expanding banking system.²⁰ The Social Democratic Party responded by preparing a popular initiative “against the abuse of banking secrecy and banking power”. It sought greater transparency in banking, tighter limits on the protection of foreign flight capital and better protection of savers. When the initiative finally came to the vote on 20 May 1984, it was rejected by 73 per cent of voters and by every canton.²¹ The result confirmed that Swiss voters did not want to dismantle banking secrecy. At the same time the banks had understood that they could keep public confidence only if they showed that secrecy did not shelter crime.

Notes

1. Le Temps, “Les grandes affaires économiques de la Suisse (2/6). Le scandale de Chiasso, ou l’histoire d’une banque dans la banque”, https://www.letemps.ch/economie/grandes-affaires-economiques-suisse-26-scandale-chiasso-lhistoire-dune-banque-banque. The article, which draws on Joseph Jung, Von der Schweizerischen Kreditanstalt zur Credit Suisse Group (Zurich: NZZ Verlag, 2000), also describes Texon’s investments in tourism, wine and toys and calls the structure “une banque dans la banque”. ↩
2. Historisches Lexikon des Fürstentums Liechtenstein, Hanspeter Lussy, “Chiasso-Skandal”, https://historisches-lexikon.li/Chiasso-Skandal. The article dates the management of Italian flight capital through Texon to the years 1961–1977. ↩
3. HLFL, Lussy, “Chiasso-Skandal” (above). ↩
4. swissinfo.ch, Gemma d’Urso, “La grande leçon du scandale Texon”, 23 April 2002, https://swissinfo.ch/fre/la-grande-le%C3%A7on-du-scandale-texon/2671070. ↩
5. HLFL, Lussy, “Chiasso-Skandal” (above). On the negative interest rate on foreign deposits and the capital controls of the 1970s, see chapter F.IV of this book. ↩
6. Le Temps, “Le scandale de Chiasso” (above). The English-language Wikipedia article “Chiasso scandal” also mentions the warning by a UBS manager in 1968, https://en.wikipedia.org/wiki/Chiasso_scandal. ↩
7. Kaspar Silberschmidt, “SKA-Kommunikation vor und nach dem Chiasso-Skandal” (short version, August 2014), https://www.ks-kommunikation.ch/pdf/Chiasso_SKA-Kom._Kurzversion.pdf. The document analyses the bank’s press communiqués during the crisis. ↩
8. swissinfo.ch, d’Urso, “La grande leçon du scandale Texon” (above). ↩
9. Ticino Turismo, “Il Ticino degli anni 70: Lo ‘scandalo’ di Chiasso”, on Vassalli’s relations with Texon, described as “non rilevante ma reale”, and his resignation under political and media pressure, https://www.ticino.ch/de/about-us/ett-storico/anni-70/scandalo-chiasso.html; Wikipedia, “Chiasso scandal”, giving the date of the resignation as 19 June 1977 with reference to 24 heures of 18 June 1977, https://en.wikipedia.org/wiki/Chiasso_scandal. ↩
10. HLFL, Lussy, “Chiasso-Skandal” (above). ↩
11. swissinfo.ch, “Décès de l’ancien patron de Credit Suisse Heinz Wuffli”, 9 August 2017, https://www.swissinfo.ch/fre/d%C3%A9c%C3%A8s-de-l-ancien-patron-de-credit-suisse-heinz-wuffli/43398906. ↩
12. Silberschmidt, “SKA-Kommunikation” (above). ↩
13. HLFL, Lussy, “Chiasso-Skandal” (above). ↩
14. Silberschmidt, “SKA-Kommunikation” (above); Le Temps, “Le scandale de Chiasso” (above), which also names Fritz Leutwiler as president of the National Bank at the time. ↩
15. Wikipedia, “Chiasso scandal” (above), stating that the offer of a three-billion-franc bridging loan was rejected by the bank’s management; Ticino Turismo, “Lo ‘scandalo’ di Chiasso” (above), stating that Credito Svizzero had to cover a hole of more than CHF 1.2 billion from its own reserves. ↩
16. Silberschmidt, “SKA-Kommunikation” (above); HLFL, Lussy, “Chiasso-Skandal” (above); swissinfo.ch, Balz Bruppacher, “A brief history of Swiss banking oversight and its scandals”, 20 July 2026, https://www.swissinfo.ch/eng/swiss-position/a-brief-history-of-swiss-banking-oversight-and-its-scandals/91762180. ↩
17. HLFL, Lussy, “Chiasso-Skandal” (above). ↩
18. swissinfo.ch, d’Urso, “La grande leçon du scandale Texon” (above). ↩
19. Silberschmidt, “SKA-Kommunikation” (above), for the dates of the trial, the civil award and the negative interest dispute. The document dates the Federal Supreme Court decision on the negative interest claims to January 1980. ↩
20. Année politique suisse 1977, “Schwieriger als die materiellen Einbussen sind jedoch die psychologischen und politischen Auswirkungen der Affäre Chiasso einzuschätzen”, https://politchronik.swiss/de/prozesse/14412-schwieriger-als-die-materiellen-einbussen-sind-jedoch-die-psychologischen-und-politischen-auswirkungen-der-affare-chiasso-einzuschatzen. ↩
21. Swissvotes, vote no. 319, “Initiative ‘gegen den Missbrauch des Bankgeheimnisses und der Bankenmacht’”, 20 May 1984, https://swissvotes.ch/vote/319.00 (26.96 per cent yes, turnout 42.52 per cent). ↩

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 September 2025.