Scandal-plagued Credit Suisse keeps skeletons hidden after board buries key report

February 10, 2022, 2:25 PM UTC

Last year was one that long-suffering Credit Suisse shareholders were happy to close the books on, and now the scandal-plagued European bank is trying to help investors forget. 

Anyone keen to understand how management granted disgraced businessman Lex Greensill the chance to originate and package $10 billion in dodgy debt, sold to its clients before his supply-chain financing empire collapsed, will be spared the gory details. 

Unlike the 165-page report into the Archegos disaster, the only ones outside of Credit Suisse’s board of directors able to read the external independent report it commissioned is the Swiss financial regulator FINMA. 

“The clear recommendation by our legal advisers is not to publish it,” chief executive Thomas Gottstein told reporters on Thursday, citing “complexities” around the recovery process. 

The under-fire CEO had just come from a call with investors, who warned him they have been “sitting on losses for several years now” thanks to one scandal after the other.

The best he could offer up was news that 72% of the client funds had been recovered, with assurances it is still working to reclaim the remaining $2.6 billion of client funds.

Cautionary example

Credit Suisse, which posted a 1.6 billion Swiss franc ($1.7 billion) net loss for last year, is a cautionary example of a systemically important bank that seems to lurch from one crisis to the other. 

Even the bank’s designated savior, Antonio Horta-Osorio, found himself mired in controversy just months into the job. Brought in by the board to serve as chairman at the end of April, it emerged he broke COVID travel rules, and he was effectively sacked in January.

Now investors are turning their guns on the board’s lead independent director, Roche CEO Severin Schwan, pushing for his departure, according to a report in the Financial Times

While the Archegos scandal could be blamed on the bank’s prime brokerage unit serving the wishes of its clients, the Greensill disaster threatens to harm Credit Suisse’s reputation as a leading manager for the world’s wealthy, competing with crosstown rival UBS. 

Gottstein, a 22-year veteran of the bank who once more stressed his intention to soldier on, defended the decision to keep the findings under wraps.

“We think it is absolutely in the interest of our investors that we do not publish this report,” he told reporters. 

Only time will tell whether it helps them to forget, but it will most certainly keep them in the dark. 

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