Factbox: Spies, Lies, and the President’s Departure: The Credit Suisse Scandals

The logo of Swiss bank Credit Suisse is seen at a branch in Zurich, Switzerland, November 3, 2021. REUTERS/Arnd WIegmann

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Jan 17 (Reuters) – Credit Suisse (CSGN.S) chairman Antonio Horta-Osorio has resigned after flouting COVID-19 quarantine rules, the bank said on Monday, raising questions about the new strategy of the embattled lender as it tries to recover from a string of scandals.

The stark move comes less than a year after Horta-Osorio was brought in to clean up the bank’s corporate culture tainted by his involvement with collapsed investment firm Archegos and supply chain finance firm insolvent Greensill Capital.

The scandals that Switzerland’s second-biggest bank has endured in recent years, Horta-Osorio said after his arrival, were the worst he had seen in his career.

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Here are the main crises that have shaken the bank in recent years:

EXIT OF THE PRESIDENT

The personal conduct of Horta-Osorio, who joined British bank Lloyds (LLOY.L) in April 2021 and was tasked with fixing the bank, has come under scrutiny, with reports that he reportedly broke COVID-19 quarantine rules twice last year.

The bank said Horta-Osorio resigned following an investigation mandated by the council.

Board member Axel Lehmann took over as chairman effective immediately, Credit Suisse said. Read more

TUNA BONDS FRAUD

Credit Suisse pleaded guilty to defraud investors over an $850 million loan to Mozambique to pay for a tuna fishing fleet and is paying US and UK regulators $475 million to settle the case under a deal announced in October.

About $200 million of the loan was paid in bribes to Credit Suisse bankers and Mozambican government officials. The bank was aware of a huge shortfall between the funds raised and the value of the boats purchased, but did not disclose this to investors when it restructured the loan in 2016, regulators said.

Credit Suisse also arranged a loan that was kept secret from the International Monetary Fund (IMF). When Mozambique admitted $1.4 billion in undisclosed loans, the IMF withdrew its support, sending the southern African country’s economy into a tailspin.

DEFAULT ARCHEGOS

Credit Suisse lost $5.5 billion when US family office Archegos Capital Management defaulted in March 2021.

The hedge fund’s high-leverage bets on some tech stocks backfired and the value of its portfolio with Credit Suisse plummeted.

An independent report on the incident criticized the bank’s conduct, saying its losses were the result of a fundamental failure in the management and control of its investment bank, and its prime brokerage division in particular.

The report says the bank has been focused on maximizing short-term profits and failed to rein in Archegos’ voracious risk-taking, despite numerous warning signals, calling into question the competence of its risk personnel.

GREENSILL FUNDS COLLAPSE

Credit Suisse was forced to freeze $10 billion in supply chain finance funds in March 2021 when UK financier Greensill Capital collapsed after losing insurance cover for debt issued against its loans to businesses.

The Swiss bank had sold billions of dollars of Greensill’s debt to investors, assuring them in marketing materials that the high-yield notes were low risk because the underlying credit exposure was fully insured.

A number of investors have sued the Swiss bank over funds linked to Greensill. The bank said on September 27 that it had recovered and returned about $6.3 billion to investors, but warned it may struggle to recover $2.3 billion of the total.

SPY SCANDAL

Credit Suisse chief executive Tidjane Thiam was forced to resign in March 2020 after an investigation revealed the bank had hired private detectives to spy on its former head of wealth management Iqbal Kahn after he left for his big rival UBS (UBSG.S).

Credit Suisse has repeatedly downplayed the episode as an isolated incident.

In October, however, the Swiss financial regulator (FINMA) said Credit Suisse had misled them about the extent of spying. He said the bank planned seven different spy operations between 2016 and 2019 and carried out most of them.

In a rare rebuke, he said there were serious organizational shortcomings at Credit Suisse and the bank had even tried to cover its tracks by tampering with an invoice for surveillance.

In response, Credit Suisse said it condemned espionage and had taken “decisive” steps to improve its governance and strengthen compliance.

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Reporting by Scott Murdoch and David Clarke; Editing by Sumeet Chatterjee and Himani Sarkar

Our standards: The Thomson Reuters Trust Principles.

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