Swiss bank Credit Suisse scandals: Here are the scandals that have beset it

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Swiss bank Credit Suisse scandals: Here are the scandals that have beset it

On November 3, 2021, the logo of Swiss bank Credit Suisse is seen in a branch office in Zurich, Switzerland. The bank said on Monday that Credit Suisse CSGN.S Chairman Antonio Horta-Osorio has resigned after flouting COVID 19 quarantine rules, raising questions over the lender's new strategy as it tries to recover from a string of scandals.

The abrupt move came less than a year after Horta-Osorio was brought in to clean up the bank's corporate culture marred by its involvement with Archegos and insolvent supply chain finance firm Greensill Capital.

The scandals in recent years that Switzerland's second largest bank had endured were the gravest he had seen in his career, according to Horta-Osorio.

Here are the major crises that have besetting the bank in recent years:

Horta-Osorio, who joined Britain's Lloyds Bank LLOY.L in April 2021, has come under scrutiny with reports he has breached COVID 19 quarantine rules twice last year.

The bank said Horta-Osorio resigned following an investigation by the board.

Axel Lehmann, a board member, took over as chairman with immediate effect, according to Credit Suisse. Credit Suisse pleaded guilty to defrauding investors over an $850 million loan to Mozambique meant to pay for a tuna fishing fleet and is paying $475 million to the U.S. and British regulators to settle the case under a deal announced in October.

About $200 million of the loan went in kickbacks to Mozambican government officials and Credit Suisse bankers. The bank was aware of the huge shortfall between the funds raised and the value of boats bought but didn't reveal this to investors when the loan was restructured in 2016, according to the regulators.

Credit Suisse arranged a loan that was kept secret from the International Monetary Fund IMF When Mozambique admitted to $1.4 billion in unidentified loans, the IMF pulled its support, sending the southern African country's economy into a tailspin.

Credit Suisse lost $5.5 billion when U.S. family office of Archegos Capital Management defaulted in March 2021.

The hedge fund's bets on certain technology stocks backfired and the value of its portfolio plummeted as a result of Credit Suisse's highly leveraged bets on certain technology stocks.

An independent report into the incident slammed the bank's conduct, saying that its losses were the result of a failure of management and control at its investment bank, and its prime brokerage division in particular.

The report said that the bank was focused on maximising short-term profits and failed to rein in voracious risk-taking by Archegos, despite numerous warnings, calling into question the competence of its risk personnel.

In March 2021, Credit Suisse had to freeze $10 billion of supply chain finance funds when British financier Greensill Capital collapsed after it lost insurance cover for debt issued against its loans to companies.

The Swiss bank had sold billions of dollars of Greensill's debt to investors, assuring them in marketing material that the high-yield notes were low risk because the underlying credit exposure was fully insured.

A number of investors have sued the Swiss bank over the Greensill-linked funds. The bank has warned that it may struggle to recover $2.3 billion of the total after recovering and returning about $6.3 billion to investors on Sept. 27.

Credit Suisse Chief Executive Tidjane Thiam was forced to quit in March 2020 after an investigation found that the bank hired private detectives to spy on former head of wealth management Iqbal Kahn after he left for arch rival UBS UBSG.S Credit Suisse repeatedly played down the episode as an isolated incident.

Switzerland's financial regulator FINMA said in October that Credit Suisse misled them about the scale of the spying. The bank planned seven different spy operations between 2016 and 2019 and carried out most of them.

In a rare rebuke, it said there were serious organisational shortcomings at Credit Suisse and that the bank had even tried to cover its tracks by doctoring an invoice for surveillance.

Credit Suisse said it condemned the spying and had taken decisive steps to improve its governance and strengthen compliance.