The long decline

A bank of many strategies

The Credit Suisse that entered the twenty-first century was the product of an ambition that had taken shape after the Chiasso scandal of 1977. According to the Historisches Lexikon der Schweiz, the losses of about 1.4 billion francs in the branch at Chiasso marked a strategic turning point, after which the Kreditanstalt oriented itself towards international financial services. It became a subsidiary of CS Holding in 1989 and was merged into Credit Suisse Group in 1997, which employed about 80,000 people worldwide at the end of 2000, some 28,000 of them in Switzerland.¹ Under Rainer E. Gut the bank had built its partnership with First Boston into a full-scale presence on Wall Street. The investment bank that resulted gave Credit Suisse a global profile and recurring periods of high profit, while exposing it to risks that the Zurich head office never fully controlled.²

Unlike UBS, Credit Suisse came through the financial crisis of 2008 without state aid. It raised capital from private investors in the Gulf and elsewhere, and for a few years its management could present the bank as the stronger of the two Zurich institutions. That reputation proved to be a burden. Because the bank had avoided the shock that forced UBS to reduce its investment bank radically after 2009, the tension between a Swiss universal bank with a strong wealth management franchise and a volatile trading and advisory business persisted for another decade. Successive chief executives tried to resolve that tension, each with a new plan. Brady Dougan led the bank from 2007 to 2015, Tidjane Thiam from 2015 to 2020 and Thomas Gottstein from 2020 to 2022, before Ulrich Körner took over in the summer of 2022.³ FINMA later identified the inability to implement these strategies consistently as the first of three root causes of the collapse, alongside recurring scandals and deficiencies in risk management.⁴

The strategic instability had a financial dimension that remained hidden from the public for a long time. In 2017 FINMA granted the parent bank, Credit Suisse AG, a so-called regulatory filter that eased the capital treatment of its participations in foreign subsidiaries. The parliamentary investigation committee later estimated its effect at about eight billion francs at the outset and at 15.3 billion francs at the end of 2019. In its view the filter allowed the parent bank to satisfy the minimum capital ratios without any real strengthening of its capital and concealed the actual situation of the entity.⁵ The filter matters for the rest of the story because it explains why a bank whose consolidated capital ratios looked comfortable could lose the confidence of the market so quickly once investors and analysts began to examine the parent entity.

The scandals

The public image of Credit Suisse in its last decade was shaped by a sequence of scandals, each of which would have damaged an ordinary bank and which in accumulation became existential. The first had its origins in 2013, when Credit Suisse’s London arm arranged loans guaranteed by the Republic of Mozambique for the state-owned companies ProIndicus and EMATUM, officially intended for maritime security and a tuna fishing fleet. FINMA found that the two loans totalled about one billion dollars, equivalent to almost six per cent of Mozambique’s gross domestic product. The group had allowed subsidiaries to approve them without adequate oversight at group level, focusing on financial risk and neglecting reputational risk in a country exposed to corruption. FINMA also held that a suspicious payment of eight million dollars to an adviser of the Mozambican state had not been reported under the Anti-Money Laundering Act until 2019, after indictments in the United States, and that the bank had seriously violated its organisational and reporting duties. On the same day Credit Suisse agreed to pay nearly 475 million dollars to authorities in the United States and the United Kingdom. According to the Securities and Exchange Commission, the offering documents had concealed the underlying corruption and falsely stated that the proceeds would develop the Mozambican tuna fishing industry, while part of the money had been used for kickbacks to former Credit Suisse bankers and bribes to officials.⁶ The episode became known as the “tuna bonds” affair and fed the suspicion that the bank’s controls ended at the door of its most profitable desks.

The second scandal struck closer to home. In September 2019 it became public that Credit Suisse had arranged for Iqbal Khan, the former head of its international wealth management business, to be followed by private detectives after he had announced his move to UBS. The chief operating officer, Pierre-Olivier Bouée, was dismissed, and in February 2020 the chief executive, Tidjane Thiam, was forced to leave. FINMA’s investigation found that seven observations had been planned between 2016 and 2019, most of which had been carried out. Decisions to observe had been taken informally and without comprehensible reasons, communication had passed through unauthorised channels, invoices had been altered to conceal costs and several members of the executive board had known of individual cases. The supervisor spoke of an inappropriate corporate culture among parts of the operational management.⁷ For a bank whose business rested on discretion and trust, the image of detectives chasing a former executive through the streets of Zurich was more damaging than the fine print of any supervisory finding.

The year 2021 brought two losses in quick succession that exposed the weakness of risk management in the investment bank and in asset management alike. In early March 2021 Credit Suisse suddenly closed four supply chain finance funds linked to the financier Lex Greensill, in which clients had invested about ten billion dollars. FINMA later found that Greensill itself had selected the receivables placed in the funds, that the bank had relied on insurance arranged by Greensill without adequate verification and that the bank had given FINMA partly false and overly positive information. It concluded that Credit Suisse had seriously breached its supervisory obligations. Among the measures it ordered was a periodic review by the executive board of about 500 significant business relationships for counterparty risks, together with the documentation of responsibilities for some 600 senior managers.⁸ Only weeks after the Greensill closure, the collapse of the family office Archegos Capital Management inflicted a loss of more than five billion dollars on the bank. At its peak in March 2021 the exposure to Archegos reached 24 billion dollars, four times the position of the next largest hedge fund client and more than half of the equity of Credit Suisse Group AG. No member of the executive board had been informed of the risk, limit breaches had been tolerated for months and two weeks before the collapse the bank had paid 2.4 billion dollars in variation margin to Archegos.⁹

The fourth scandal concerned money laundering and led to a criminal judgment against the bank itself. On 27 June 2022 the Federal Criminal Court in Bellinzona convicted Credit Suisse of failing to take the organisational measures required to prevent the laundering of proceeds of a Bulgarian cocaine trafficking organisation in the years 2007 and 2008. A former employee was convicted of helping the organisation to move more than nineteen million francs, and the bank was fined two million francs. It was the first time that a major Swiss bank had been convicted of such offences in a Swiss criminal court.¹⁰ The later history of the case illustrates how long the legal after-effects of Credit Suisse have lasted. The former employee died in April 2023, and after a first acquittal on appeal and a referral by the Federal Supreme Court, the Appeals Chamber of the Federal Criminal Court acquitted UBS, as legal successor, on 3 March 2026. The court reasoned that the liability of the company could not be assessed fairly without violating the presumption of innocence of the deceased employee, and the judgment was not yet final.¹¹ In the public mind, however, the conviction of 2022 remained attached to Credit Suisse.

Governance in turmoil and the plan of October 2022

The response of the board to these scandals was a rapid turnover of leading personnel, which itself became a source of instability. António Horta-Osório, the former head of Lloyds Banking Group, joined as chairman at the end of April 2021 with the mandate to reform the risk culture of the bank after Greensill and Archegos. He resigned barely nine months later, on 17 January 2022, after an internal investigation into breaches of Covid-19 quarantine rules, and was succeeded by Axel Lehmann, a former UBS executive who had joined the board in October 2021. In July 2022, as the bank reported a net loss of 1.6 billion francs for the second quarter, the chief executive Thomas Gottstein stepped down for personal and health reasons. Ulrich Körner, who had previously worked for UBS, succeeded him and was charged with a new strategic review.¹²

During the months of that review, Credit Suisse lost control of its public narrative. At the beginning of October 2022 rumours about the bank’s solvency spread through social media, while the price of its credit default swaps rose to levels that signalled acute distress.¹³ Clients reacted with their money. According to the bank’s own figures, customer deposits fell by 138 billion francs in the fourth quarter of 2022, and about two thirds of the net asset outflows of that quarter occurred in October alone. The group reported that it had complied with the liquidity requirements at all times. The outflows stabilised at much lower levels later in the quarter but had not reversed by the end of the year.¹⁴ For the year 2022 the bank reported a net loss of 7.3 billion francs and net asset outflows of 123.2 billion francs, of which 110.5 billion francs fell in the fourth quarter.¹⁵

It was in the midst of this run that the board presented its plan on 27 October 2022. Chairman Lehmann spoke of a “radical strategy” to create a stronger and more efficient bank, and Körner called the day a “historic moment”. The investment bank was to be restructured radically, with a reduction of its risk-weighted assets by about forty per cent by 2025. Its capital markets and advisory business was to be spun off as an independent firm under the old name CS First Boston, with Michael Klein as designated chief executive. The securitised products business was to be sold to an investor group led by Apollo Global Management, the cost base was to be cut by 2.5 billion francs and the headcount was to fall from about 52,000 to about 43,000 by the end of 2025. To finance the restructuring, Credit Suisse announced a capital increase of about four billion francs. The Saudi National Bank committed to invest up to 1.5 billion francs for a shareholding of up to 9.9 per cent.¹⁶ The capital increase was completed in two tranches, a placement of new shares with qualified investors that raised 1.76 billion francs on 25 November and a rights offering that raised 2.25 billion francs on 9 December 2022. After the transaction the Saudi National Bank was the largest shareholder of Credit Suisse and the Qatar Investment Authority the second largest.¹⁷

The plan failed to stop the erosion of confidence. What investors doubted was whether Credit Suisse would survive the several years of restructuring losses that the plan itself foresaw. When it published its annual results in February 2023, the bank warned of a further substantial loss for the current year. The parliamentary investigation committee later divided the crisis into four phases and placed the beginning of the acute phase in October 2022, when massive liquidity outflows set in. The committee also found that the Federal Council had been informed about the situation in the autumn of 2022 only orally and in summary form, without written documentation, until a single discussion paper on scenarios was submitted on 1 February 2023. Finance Minister Ueli Maurer left office at the end of 2022, and his successor Karin Keller-Sutter received only oral briefings that described the situation of the bank as stable. In the committee’s words, the transition in the department regarding the Credit Suisse file “did not proceed optimally”.¹⁸

Behind the scenes, the authorities had begun to prepare for failure. FINMA, the Swiss National Bank and the Federal Department of Finance worked on scenarios that ranged from a restructuring under the too-big-to-fail regime to a temporary public ownership of the bank and a takeover by another institution. The committee later reported that by the weekend of 18 and 19 March 2023 several options remained under preparation, including a resolution of the bank, a temporary public ownership and the merger with UBS.¹⁹ The existence of these plans did not make the choice easy. Each option carried risks that the authorities would have to weigh within days once the crisis became acute.

Notes

1. Historisches Lexikon der Schweiz (HLS), Jan-Henning Baumann, “Schweizerische Kreditanstalt (SKA)”, version of 27 November 2012, https://hls-dhs-dss.ch/de/articles/041821/2012-11-27/. ↩
2. Froelicher, “The turbulent history of Credit Suisse” (cited above), which describes the reorientation of the bank under Rainer E. Gut towards international expansion and investment banking on Wall Street through the First Boston partnership. ↩
3. Wikipedia, “Brady Dougan”, https://en.wikipedia.org/wiki/Brady_Dougan (chief executive from 2007 until June 2015, succeeded by Tidjane Thiam as announced on 10 March 2015); Wikipedia, “Ulrich Körner”, https://en.wikipedia.org/wiki/Ulrich_K%C3%B6rner (appointed chief executive in July 2022, succeeding Thomas Gottstein). The dates of Thiam’s and Gottstein’s departures are verified in the notes below. ↩
4. FINMA, “FINMA publishes report on lessons learned from the CS crisis”, press release of 19 December 2023, https://www.finma.ch/en/news/2023/12/20231219-mm-cs-bericht/. The report names the failure to implement strategic changes, the recurring scandals and the weaknesses in risk management and risk culture as the core causes. ↩
5. Parlamentarische Untersuchungskommission (PUK), “Geschäftsführung der Behörden im Kontext der Notfusion der Credit Suisse”, report of 17 December 2024, summary (extract), https://www.parlament.ch/centers/documents/de/Auszug%20Bericht%20PUK%2019.12.2024%20Zusammenfassung%20D.pdf. The committee describes the filter as an extensive interpretation of the legal basis and as inexpedient. ↩
6. FINMA, “FINMA concludes proceedings against Credit Suisse”, press release of 19 October 2021, https://www.finma.ch/en/news/2021/10/20211019-mm-cs-mosambik/. FINMA ordered independent reviews of the improvements in risk management and temporary transparency duties for future loans to financially weak or corruption-prone states; US Securities and Exchange Commission, “Credit Suisse to Pay Nearly $475 Million to U.S. and U.K. Authorities to Resolve Charges in Connection with Mozambican Bond Offerings”, press release 2021-213 of 19 October 2021, https://www.sec.gov/newsroom/press-releases/2021-213. The release refers to two bond offerings and a syndicated loan that together raised more than one billion dollars. ↩
7. finews.com, “Credit Suisse Faces Regulatory Slap Over Spygate”, https://www.finews.com/news/english-news/42746-credit-suisse-spy-finma-enforcement-iqbal-khan-tidjane-thiam-pierre-olivier-bouee-surveillance-urs-rohner. The article reports that the surveillance was coordinated through the messaging application Threema and that FINMA opened enforcement proceedings in September 2020; FINMA, press release on the observation activities of Credit Suisse, 19 October 2021, https://www.finma.ch/en/news/2021/10/20211019---mm---obs/. FINMA issued two written reprimands and opened enforcement proceedings against three further individuals. ↩
8. FINMA, “FINMA concludes ‘Greensill’ proceedings against Credit Suisse”, press release of 28 February 2023, https://www.finma.ch/en/news/2023/02/20230228-mm-greensill/. FINMA also opened four enforcement proceedings against former managers. ↩
9. FINMA, “FINMA concludes ‘Archegos’ proceedings against Credit Suisse”, press release of 24 July 2023, https://www.finma.ch/en/news/2023/07/20230724-mm-archegos/. On the same day the Federal Reserve imposed a fine of 268.5 million dollars and the Prudential Regulation Authority one of 87 million pounds. ↩
10. swissinfo.ch, “Credit Suisse convicted for money laundering offences”, 27 June 2022, https://www.swissinfo.ch/eng/business/credit-suisse-convicted-for-money-laundering-offences/47707022. The prosecution had asked for a fine of five million francs. ↩
11. Federal Criminal Court (Bundesstrafgericht), Appeals Chamber, press release of 4 March 2026 on judgment CA.2025.17 of 3 March 2026, https://www.bstger.ch/de/media/comunicati-stampa/2026/2026-03-04/1543.html. The court confirmed convictions of two co-defendants from the Bulgarian organisation, partly with reduced sentences. ↩
12. Euronews, “António Horta-Osório: Credit Suisse chairman resigns after allegedly breaching COVID restrictions”, 17 January 2022, https://www.euronews.com/2022/01/17/antonio-horta-osorio-credit-suisse-chairman-resigns-after-allegedly-breaching-covid-restri. Horta-Osório stated that “a number of my personal actions have led to difficulties for the bank”; Associated Press, “Credit Suisse CEO resigns as bank posts 2Q loss”, The Boston Globe, 27 July 2022, https://www.bostonglobe.com/2022/07/27/business/credit-suisse-ceo-resigns-bank-posts-2q-loss/. Revenues fell by 29 per cent to 3.6 billion francs, which management attributed to the war in Ukraine, monetary tightening and losses in leveraged finance. ↩
13. swissinfo.ch (Reuters), “Credit Suisse reassures investors over bank’s financial strength”, 3 October 2022, https://www.swissinfo.ch/eng/business/credit-suisse-reassures-investors-over-bank-s-financial-strength/47948976, reporting a rise in credit default swap spreads to about 250 basis points and a memorandum in which Ulrich Körner told staff that “Credit Suisse has a strong capital and liquidity position and balance sheet”; on the social media rumours of early October 2022 see Wikipedia, “Credit Suisse”, https://en.wikipedia.org/wiki/Credit_Suisse. ↩
14. Credit Suisse Group AG, Earnings Release 4Q22, 9 February 2023, exhibit 99.1 to Form 6-K, https://www.sec.gov/Archives/edgar/data/1159510/000137036823000011/a230209q4er-ex99_1.htm. The release states that the three-month average daily LCR stood at 144 per cent at the end of the quarter, after lower levels earlier in the quarter. ↩
15. CNBC, “Credit Suisse posts massive annual loss as radical restructure gets underway”, 9 February 2023, https://www.cnbc.com/2023/02/09/credit-suisse-posts-massive-annual-loss-as-radical-restructure-gets-underway.html. ↩
16. Credit Suisse Group AG, “Credit Suisse unveils new strategy and transformation plan”, media release of 27 October 2022, Form 6-K, https://www.sec.gov/Archives/edgar/data/1053092/000137036822000083/a20221027-6k_mr_stratupdate.htm. The pro forma CET1 ratio was expected to rise from 12.6 per cent to about 14 per cent. ↩
17. Credit Suisse Group AG, Earnings Release 4Q22 (cited above), which gives the proceeds and dates of both tranches and a CET1 ratio of 14.1 per cent at the end of 2022; CNBC, 9 February 2023 (cited above), on the shareholder structure. ↩
18. PUK report, summary (cited above), sections on the phases of the crisis, the Federal Council and the Federal Department of Finance. The committee distinguishes a first phase from 2015 to the summer of 2022, a second phase from the autumn of 2022 to mid-March 2023, the acute crisis of 15 to 19 March 2023 and the implementation phase until the closing on 12 June 2023. ↩
19. PUK report, summary (cited above), section on the crisis weekend. ↩

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.