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Chairman of the Board of Directors of Credit Suisse, Axel Lehmann, left, attends a news conference on Credit Suisse after UBS Group's US$3.25-billion takeover, in Bern, Switzerland, March 19.DENIS BALIBOUSE/Reuters

UBS Group’s UBS-N US$3.25-billion all-share deal to buy troubled rival Credit Suisse Group CSGKF was announced on Sunday evening after a week of uncertainty for the 167-year-old Swiss lender.

The fast-tracked deal follows a period of immense turmoil at the bank. Credit Suisse’s share price has declined by 75 per cent in the past year alone. Investors began selling off shares in 2021 after the bank reported billions of dollars in losses related to the collapse of Archegos Capital Management and Greensill Capital. That same year, chairman Antonio Horta-Osorio was hired to lead a turnaround at the bank; he resigned just eight months later for breaching COVID-19 rules.

Last month, the bank reported its largest annual loss since the global financial crisis, amounting to 7.29-billion Swiss francs. A rumour last autumn that the bank was failing spooked customers, who pulled 110-billion Swiss francs of funds out of Credit Suisse in the fourth quarter. The crisis accelerated over the past week after the failure of California’s Silicon Valley Bank further shook investors.

Credit Suisse found itself the subject of scrutiny on many occasions over its often-controversial history.

Here are some recent examples.

U.S. Tax Fraud Conspiracy

In 2014, Credit Suisse pleaded guilty to helping American clients file false tax returns dating back decades. The bank was fined US$2.6-billion. It was not the first, or the last time Credit Suisse faced investigations related to tax evasion. In 2011, the Swiss bank announced it had agreed to pay €150-million to settle an investigation into allegations into tax dodging by some German clients. And in 2016, Credit Suisse agreed to pay a €109.5-million settlement to Italian authorities to end an investigation into allegations that the bank used a fraudulent system to transfer clients’ funds offshore, helping them to dodge taxes.

Mozambique “Tuna Bonds”

In 2021, Credit Suisse paid a £350-million settlement after its role in this scandal further battered its global image. Credit Suisse made US$1.3-billion in loans to the People’s Republic of Mozambique between 2012 and 2016, some of it purportedly to buy a fleet of tuna fishing boats to develop the industry there. But a government contractor was found to have arranged US$50-million in kickbacks to bankers in exchange for better terms on the loans, and some of the funds were unaccounted for. Mozambique also arranged a loan with Credit Suisse that was kept secret from the International Monetary Fund; when the IMF consequently pulled support, it sent the country’s economy into crisis.

Archegos and Greensill scandals

Also in 2021, the Swiss bank recorded a US$5.5-billion loss on its exposure to hedge fund Archegos Capital Management. That company defaulted after making risky leveraged bets on technology stocks. An independent report questioned risk-management standards at Credit Suisse, saying warning signs at Archegos were ignored or played down. Credit Suisse said it fired some staff and disciplined others.

Another crisis came the same year, when Credit Suisse was forced to freeze US$10-billion worth of investor funds after the collapse of British supply chain lender Greensill Capital. Credit Suisse packaged and sold Greensill loans to investors. Last month, Swiss regulator FINMA found that the bank “seriously breached its supervisory obligations” to monitor and limit risks in its business relationship with financier Lex Greensill. Credit Suisse reimbursed nearly US$5-billion to investors in 2021 as a result of the collapse.

In the wake of the Archegos and Greensill cases, Credit Suisse committed to overhauling its risk-management and compliance practices.

Bulgarian drug-ring money laundering

In 2022, Switzerland’s Federal Criminal Court found Credit Suisse and a former employee guilty of failing to prevent money laundering by a Bulgarian cocaine-trafficking ring from 2004 to 2008. The court said it found “deficiencies” in the Swiss bank’s implementation of anti-money-laundering rules, and handed down a fine of 2-million Swiss francs. The drug ring allegedly laundered more than 146-million Swiss francs through its accounts. The former employee said during court hearings that Credit Suisse continued to manage the funds even after learning about murders and cocaine smuggling allegedly linked to the clients. The bank has denied wrongdoing and said it planned to appeal the decision.

Georgian ex-prime minister sues over fraud

In 2022, a court in Bermuda found that Credit Suisse’s local life insurance arm owed more than US$500-million in damages to billionaire and former Georgian prime minister Bidzina Ivanishvili. The decision, which CS Life is appealing, stems from the 2018 fraud conviction of former banker Patrice Lescaudron, who admitted to forging client signatures – including Mr. Ivanishvili’s – and using their funds without authorization to make stock bets and cover losses. Mr. Ivanishvili has also launched a lawsuit over the matter in Singapore against Credit Suisse’s trust unit there. Last month, ahead of a hearing in that case, Bloomberg reported that the Swiss bank had confirmed it has so far paid US$210-million to Mr. Ivanishvili in the continuing legal fight.

With a file from Reuters

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