Credit Suisse: a timeline of what is happening
This month alone, two significant banks in the United States have failed. Silicon Valley Bank's collapse on March 8 observed the biggest bank failure in US history since the Great Recession. Two days later, Signature Bank also shut down.
In an unrelated yet worrying scenario, Credit Suisse in Switzerland has been facing trouble, worsened by a global banking crisis, that has left the bank with a loss of more than 75% of its value in the past 12 months.
Here's a short timeline of the latest unfoldings on the Credit Suisse crisis.
Credit Suisse was founded in 1856 to finance the railroad network expansion and promote Swiss industrialization. Throughout the years, it positioned itself as a global financial giant, funding the creation of Switzerland's electrical grid, helping companies restructure after World War I and II, and financing tech companies.
However, the bank's history is filled with scandals and controversies, such as the 1999 Japanese "shredding party," its links to a Nigerian dictator, and corporate espionage.
2021
The US hedge fund Archegos Capital Management and the supply-lender Greensill Capital collapsed. Given the exposure and links that Credit Suisse had with these financial companies, it registered a $5.5 billion loss and suspended $10 billion of investor funds.
Once the losses triggered the sell-off of the bank's shares, Portuguese banker António Horta-Osório was hired as chairman of Credit Suisse to face the crisis and fix the reputational damage.
2022
Merely eight months after Credit Suisse hired Horta-Osorio as the new chairman, he resigned following an internal bank investigation that determined he'd broken Covid-19 quarantine rules in Switzerland and the UK.
By July, Ulrich Koerner was already performing as the new CEO, but this restructuring expert's unveiling of a strategic review failed to win over investors. As the rumor of the impending failure of the bank by the end of autumn grew, customers continued to flee, pulling $119 billion of funds during the fourth quarter.
2022 Fiscal Year
As a result, Credit Suisse closed the 2022 fiscal year with a nearly $8 billion loss, its most significant loss since the 2008 global financial crisis.
Two other scandals during this year also took a toll on the bank: it was fined $2.1 million and ordered to pay the Swiss government $20 million for failing to prevent money laundering by a Bulgarian cocaine trafficking gang, and a court in Bermuda found that Credit Suisse owes a former Georgian Prime Minister and his family $500 million in damages from the bank's local life insurance.
March 15, 2023
Saudi National Bank (SNB), Credit Suisse's biggest investor, announced it couldn't give the Swiss bank any more money, citing regulatory rules preventing them from going above a 10% share.
Last year, SNB bought a 9.9% share in Credit Suisse, which was part of the bank's $4.2 billion capital raise used to pay for a substantial strategic makeover to improve investment banking performance and fix its risk and compliance breaches.
March 16, 2023
Following SNB's statement, Credit Suisse reported that it would borrow almost $54 billion from the Swiss National Bank under a covered loan facility and a short-term liquidity facility.
This new announcement by the bank led to a 33% raise in its shares, which ultimately settled around a 17% gain as investors backed the central bank's efforts to keep Credit Suisse from going bankrupt.
March 16, 2023
Following SNB's statement, Credit Suisse reported that it would borrow almost $54 billion from the Swiss National Bank under a covered loan facility and a short-term liquidity facility.
This new announcement by the bank led to a 33% raise in its shares, which ultimately settled around a 17% gain as investors backed the central bank's efforts to keep Credit Suisse from going bankrupt.
March 19, 2023
UBS, Switzerland's biggest bank, decided to buy its troubled and longtime rival, Credit Suisse, for roughly $3.2 billion; this is the most drastic move yet to stop the financial panic -surrounding Credit Suisse's crisis- that has escalated in the past week.
Even though the Swiss government and UBS are rushing to close the sale in the next month, it's a process that could take much longer given the number of approvals it needs from regulators in tens of countries worldwide.
