Switzerland’s financial regulator started enforcement proceedings against Credit Suisse Group AG over a spying scandal that led to the ouster of ex-Chief Executive Officer Tidjane Thiam.
The move marks an escalation of regulatory involvement in the espionage charges, which also triggered probes by Swiss prosecutors. Finma said it will pursue any potential violations of supervisory law, and in particular will scrutinize how these activities were documented and controlled.
Credit Suisse is struggling to move beyond one of the most damaging episodes in its recent history after it spied on star banker Iqbal Khan, who was leaving for rival UBS Group AG. The scandal tainted the bank’s reputation, led to the exit of Thiam in a power struggle, and rattled Swiss financial circles.
Chairman Urs Rohner turned to Thomas Gottstein, a two-decade Credit Suisse veteran, to restore investor confidence. Gottstein has had to contend with a series of setbacks since the onset of the coronavirus pandemic, including losses from soured loans in Asia, allegations of conflicts of interest at the bank’s fund unit, a fraud case in its wealth business and questions about its role in helping disgraced German payments firm Wirecard AG raise funds.
Credit Suisse said in a statement Wednesday that it takes note of Finma’s decision and will continue to fully cooperate.
“The Board of Directors and the Executive Board of Credit Suisse agree and unequivocally affirm that the observation of employees is not part of the culture of Credit Suisse,” Credit Suisse said. “No further comments can be made at this stage until findings are presented by Finma.”
Shares of Credit Suisse rose 0.8% at 10:03 a.m. in Zurich trading. They’re down 24% this year.
An internal probe ordered by the bank at the time of the scandal had concluded that Thiam didn’t know about the spying, and that Chief Operating Officer Pierre-Olivier Bouee was responsible. It later emerged that ex-human resources chief Peter Goerke had been monitored, and a former U.S. executive also said she had been followed. Bouee was fired late last year.
Finma launched its own investigation in December, appointing an independent auditor who has now completed the initial probe. The regulator said enforcement proceedings can take several months and it will inform the public once they are concluded.
Finma doesn’t have the power to fine a bank, but it can demand repayment of profits deemed illicit or otherwise suspicious. Similarly, while it cannot fine individual bankers, it can ban them from the industry for up to five years.
Credit Suisse was criticized by Finma two years ago over its failure to properly oversee a former star wealth manager convicted of fraud, as well as its dealings with soccer’s governing body FIFA and two South American oil companies. At the time, the bank was ordered to improve internal controls and be subject to third party monitoring to oversee their implementation.
It’s not clear yet if Finma’s enforcement proceedings will lead to any new investigation into the broader scandal. Zurich prosecutors did open a probe into the original complaint that Khan filed after discovering that he was followed. Authorities also investigated the suicide of a Credit Suisse contractor caught up in the scandal.
A spokesman for the Zurich prosecutor’s office said Finma proceedings do not have a “direct influence” on its own ongoing investigations.
A message left with the federal prosecutor’s office in the Swiss capital Bern was not immediately returned. Federal prosecutors have investigated Swiss banks caught up in the FIFA affair as well as scandals involving oil producers PDVSA and Petrobras.