Why in the news?
166-year-old Credit Suisse AG bank sold to UBS Group AG( Union Bank of Switzerland). UBS will pay around $3.3 billion to Credit Suisse and Switzerland Government will Provide more than $9 billion to backstop some losses that UBS may incur during the takeover. Swiss National Bank will provide more than $100 billion in liquidity to UBS to facilitate the deal.
Credit Swiss becomes the 3rd Megabank to collapse in 12 days.
Credit Suisse AG
Credit Suisse AG is a banking service provider. It provides private and investment banking, wealth and asset management, personal and business loans, and advisory services. Credit Suisse serves corporate, high-net-worth individuals, and institutions worldwide.
Also, the business provides advisory services, transaction banking, alternative investments, and other helpful services. It services retail, commercial, institutional, high-net-worth, ultra-high-net-worth, and wealthy family clients through a network of branch offices, representative offices, ATMs, online portals, and wealth managers.
Where does the company operate?
Credit Suisse is headquartered in Zurich, Switzerland.
It operates in Europe, Asia-Pacific, Africa, Middle East, and the Americas.
When and Why is Credit Suisse broken?
- 166 years ago, Credit Suisse was established to assist in financing Switzerland’s train system. It rose to become a household name in the banking industry and one of the biggest banks in the world.
- Nonetheless, the bank’s image has suffered greatly over the past several years due to a number of factors
- Credit Suisse entered a guilty plea in 2014 to federal charges that it had improperly permitted some U.S. clients to dodge taxes. As part of the settlement, the bank gave the federal government and New York’s financial regulators a total payment of $2.6 billion.
- A Luckin Coffee accounting scandal hurt the bank’s reputation. In 2019, Credit Suisse served as an underwriter for the company’s Nasdaq IPO.
- Tidjane Thiam, the CEO of Credit Suisse, resigned in 2020 following two high-profile surveillance scandals involving senior bank personnel.
- In 2021, Credit Suisse lost $5.5 billion as a result of the failure of the US hedge fund Archegos Capital. Archegos Capital was given permission by Credit Suisse to take “voracious” and “possibly catastrophic” risks, which ended in the American hedge fund’s stunning collapse, according to a subsequent independent external review.
- Customers withdrew billions of dollars from the bank in 2022 as a result of social media rumours that it was about to collapse. For the bank, which has been losing money for years, this has made profitability all but impossible.
And last month that is Feb 2023, after posting its largest annual loss since the 2008 financial crisis, Credit Suisse’s stock fell to historic lows.
Credit Swiss is also associated with a money laundering scheme involving a cocaine trafficking ring in Bulgaria and its use of detectives to spy on a departing executive who later joined a rival bank some years ago.
