Apr 28th, 2023, 09:00 AM

The Anatomy of Credit Suisse's Downfall

By Paulina Kudevita
Credit Suisse's HQ in Zurich, Switzerland (Image credit: Wikimedia / Thomas Wolf )
Inside Credit Suisse’s domino effect on the international banking system.

Credit Suisse, one of the most notorious banks in Switzerland, has fallen in the first few weeks of March. They were the second top bank in Switzerland for many years regarding asset acquisition, however, after many scandals and the fall through of bonds, Credit Suisse's future as an investment bank has come to a halt. As many students aspired to work at Credit Suisse, let’s explore the reasons why their dream company has fallen through. 

In March 2023, Credit Suisse collapsed and was bought out by its closest competitor, UBS Group AS (UBS). UBS purchased Credit Suisse for 3 billion Swiss Francs without the approval of shareholders in order to restore financial equilibrium and regulate international banking. Credit Suisse had suffered losses that worried shareholders and failed to manage risks shown in their financial statements. After its stock plummeted due to multiple scandals, Credit Suisse’s goal was to boost the amount of money it could scrape from its assets in order to improve its liquidity. This instilled worry in Credit Suisse shareholders and investors. Saudi National Bank, Credit Suisse's largest shareholder, refused to purchase more shares from Credit Suisse, as the Saudi Arabian bank had suffered losses from Credit Suisse earlier in the year. Consequently, after UBS acquired Credit Suisse, the Chairman of Saudi National Bank resigned. 

“I saw a post about an internship at Credit Suisse on my Linked In page. At the time, Credit Suisse was still operating normally so I decided to draft up a cover letter to start the application process. After doing some research on the company, I ended up not applying. I was so disheartened by what I saw, I wasn't shocked when news came out that the company was in crisis,” said Angelina Zagaynova, an AUP senior majoring in International Finance, Mathematics and Computer Science. 

UBS's market share doubled as it continued to sell off pieces of Credit Suisse assets. In addition to this, UBS brought back their former CEO, Sergio Ermotti to manage the acquisition of Credit Suisse. The downfall of Credit Suisse is constructed from various unique pieces that need to be fully examined to understand how this became. 

Significant scandals had taken hold of Credit Suisse’s reputation numerous times. Within the last two years, there have been multiple scandals that have not helped Credit Suisse's reputation. In February 2020, Credit Suisse was involved in a spying scandal where former CEO, Tidjane Thiam resigned from his position in a corporate espionage scheme against the former wealth manager of Credit Suisse, Iqbal Khan. Following this, in October 2021, Credit Suisse was fined $475 million by American and British regulators for bonds and investments that were hidden under undisclosed projects. The court found these projects were likely used for bribes instead. 

In January 2022, the new chairman, Antonio Horta-Osorio was appointed for risk management. He resigned after nine months due to breaking Covid protocols. Horta-Osorio had attended the Wimbledon Championships during the United Kingdoms’s strictest lockdown. 

During his time there, he said he had not seen a bank during his whole career that was in a worse situation than Credit Suisse.  

Then, in February 2022, Credit Suisse had a data leak where 18,000 bank accounts were exposed for allegedly stashing funds for high-profile international entities and drug-related operations. However, Credit Suisse denied such a thing happening. After this, Credit Suisse shares fell 15% resulting in the bank hemorrhaging money with allotted expenses in debt, liabilities and operating costs. 

People on Twitter have since responded with strong opinions about the bank.


In March 2022, Credit Suisse was ruled by a Bermuda judge to pay $533 million to former Prime Minister of Georgia, Bidzina Ivanishvili. This whole event stemmed from Credit Suisse Life Bermuda, one of Credit Suisse's subsidiaries that had apparently lost hundreds of millions of Swiss Francs. Bidzina Ivanishvili and other notable Russian clients had sued Credit Suisse in relation to the crumbling fraud scheme by Patrice Lescaudron. Patrice Lescaudron committed fraud on hundreds of millions of Swiss Francs from his clients, resulting in his client's losses of hundreds of million Swiss Francs, whilst simultaneously creating immense wealth for Patrice Lescaudron himself.  He was found guilty and ordered to serve five years in prison, however, he served ten months before requesting an appeal in 2018. He later committed suicide.

Students at AUP were shocked to learn of the scandals that infiltrated Credit Suisse. Anita Savoj, a senior studying International Business Administration discusses her view on Credit Suisse: “I didn't know the situation was that bad; it reminds me of the corruption in my country, Iran.”

“Knowing what I know now, I would not work nor open an account with them and it worries me because it's hard to verify things like this before the scandals come out so there is only so much I can learn about a company that I am applying to or a bank I want to use,” added Savoj.

“I'm glad I have never thought of working for Credit Suisse," said senior Nicholas Piani, in reaction to learning about Credit Suisse’s scandals that caused their demise. "There are clearly a lot of dishonest things that executives have done and the bank kept sweeping things under the rug.”

This complex situation allows us to understand all the factors that played into the result of Credit Suisse’s ultimate demise. Everyday decisions built up to lead to one of the world's most influential banks falling, and a lot can be learned from this situation regarding risk management, failure to monitor employees closely, ethics and fraud.