In March 2023, Credit Suisse was taken over by its archival UBS, thereby bringing the curtains down on a kaleidoscopic saga of greed, ambition, and hubris. Repeatedly racked by scandals and consistently embroiled in sleazy business deals, the once storied and venerable behemoth of the banking and finance industry was finally brought down to its knees.
Financial journalist Duncan Mavin, in Meltdown, chronicles in compelling detail the continuing excesses at Credit Suisse which led to the financial institution’s collapse. The reader at times is left wondering whether the 275 pages represent a mere primer into the financial and ethical chicanery practiced by the head honchos operating at the highest levels of power and politics.
Just a year before the bank was gobbled up by UBS a revealing report prepared internally described the unenviable state the bank found itself in. With a burgeoning headcount and accumulating expenditure to rival that of the hugely successful investment bank Goldman Sachs, Credit Suisse generated a meagre fifth of Goldman’s per capita revenue. The lopsided policy of the bank is captured in a telling detail shared by Mavin. While staring at cumulative losses of more than $2 billion over a decade leading to its consequential takeover, the bank had doled out a whopping $35 billion in bonuses during the same period.
Straddling two continents, Credit Suisse found itself in a continuous struggle to establish a definite identity. As Mavin informs his readers, the cultural differences between Zurich and New York prevented a permanent acculturation of thoughts and deeds. When John Mack, the former President of Morgan Stanley, was hired by Credit Suisse to head its Wall Street operations, he refused to learn German (language of Credit Suisse’s Board) and constant clashes with the senior management ensured that Mack’s tenure lasted all of three years.
The gamut of scandals permeating Credit Suisse range from the bewildering to the banal. In the year 2018, former Credit Suisse advisor Pascale Lescaudron was convicted by a Swiss court in 2018 of having forged the signatures of former clients, over an eight-year period. One of the clients included former Georgian Prime Minister Bidzina Ivanishvili.
An appalling lack of internal controls within the bank led to the unearthing of a scandal surrealist in its sweep and wake. Bankers at the London office of Credit Suisse arranged for representatives of the Mozambique government to borrow $500 million towards procurement of a fleet of tuna-fishing boats. When the dust finally settled on the deal, approximately $200 million of the loan went towards kickbacks to Credit Suisse bankers and Mozambican government officials. Even though knowledgeable of a material shortfall between the funds raised and the value of boats bought, the bank failed in its fiduciary duties to disclose this to investors.
The government of Mozambique withstood the worst of the swindle when the International Monetary Fund (“IMF”) pulled its support for the country after details became known about Mozambique admitting to existence of $1.4 billion in undisclosed loans arranged by Credit Suisse, right under the nose of the IMF.
Credit Suisse has also been a revolving door for Chief Executives. Every controversy at the bank has been inevitably preceded by and invariably succeeded by departing and income CEO, respectively. For example, the tumultuous reign of Tidjane Thiam, a French and Ivorian national was marred by the “Spy gate” incident. A former associate at the Bank who had fallen out of favours with Thiam, before heading to UBS was followed by private detectives. Even though Thiam denied any knowledge about the covert surveillance activity, the perpetrators of the misdeed were assigned the job by a consultant working for ‘Credit Suisse’s Chief Operating Officer.”
Meltdown, a sordid tale of unfettered greed and gluttony.