Credit Suisse facts for kids
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Headquarters on Paradeplatz in Zürich, designed by architect Jakob Friedrich Wanner and inaugurated in 1876
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Formerly
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Schweizerische Kreditanstalt |
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| ISIN | ISIN: [https://isin.toolforge.org/?language=en&isin=CH0012138530 CH0012138530] |
| Industry | Financial services |
| Founded | 5 July 1856 |
| Founders |
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| Headquarters |
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Switzerland
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Area served
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Worldwide |
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Key people
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| Products | Investment and private banking, asset management |
| Revenue |  CHF 14.92 billion (2022) |
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Operating income
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CHF −3.2 billion (2022) |
| CHF −7.3 billion (2022) |
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| AUM | CHF 1.29 trillion (2022) |
| Total assets | CHF 531.4 billion (2022) |
| Total equity |  CHF 45.13 billion (2022) |
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Number of employees
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50,480 (end 2022) |
| Parent | UBS Group AG |
| Capital ratio | 14.1% (end 2022, CET1) |
| Rating | S&P: BBB− Fitch: BBB Moody's: Baa2 |
Credit Suisse Group AG was a big bank and financial company from Switzerland. Its main office was in Zürich, but it had offices all over the world. It offered services like helping companies with big investments, managing money for wealthy people, and handling other financial tasks.
Credit Suisse was started in 1856 to help build railways in Switzerland. It also gave loans to create Switzerland's electrical grid and the wider European rail system. In the 1900s, it started offering services to everyday people, like savings accounts. Over the years, Credit Suisse bought many other companies, including First Boston and Winterthur Group.
Even though it handled the global financial crisis better than some banks, Credit Suisse later faced challenges. It had to reduce its investment business and cut costs. The bank was also involved in several international investigations about how it handled money, leading to large fines. By the end of 2022, Credit Suisse managed about CHF 1.3 trillion in assets.
In March 2023, another Swiss bank, UBS, announced it would buy Credit Suisse. This happened to prevent Credit Suisse from collapsing. UBS finished the purchase in June 2023.
Contents
History
Early Years
Credit Suisse was founded on July 5, 1856, by Alfred Escher. It was first called the Swiss Credit Institution (Schweizerische Kreditanstalt). Its main goal was to fund railway projects in Switzerland. Escher wanted to avoid relying on French banks for money. The bank quickly sold many shares and opened its doors on July 16, 1856.
Credit Suisse played a big part in Switzerland's economic growth. It helped develop the country's money system and funded important projects like the Gotthard railway. This railway connected Switzerland to the European rail system in 1882. The bank also helped fund Switzerland's electrical grid. By the end of the 1870 Franco-Prussian War, Credit Suisse had become the biggest bank in Switzerland.
In the late 1800s, Credit Suisse started setting up banking and insurance companies in other countries. It helped create insurance companies like Swiss RE and Swiss Life. In 1886, the bank had its first year without making a profit. This was due to losses in farming, investments, and international trade.
In the early 1900s, Credit Suisse began offering services to regular people. It opened deposit counters, currency exchanges, and savings accounts. The first branch outside of Zürich opened in 1905 in Basel. After World War I, the bank helped companies rebuild and gave loans for recovery efforts. During the economic downturn of the 1920s, profits and employee salaries were cut.
After World War II, Credit Suisse helped with reconstruction efforts in other countries. In the 1970s, a Credit Suisse branch in Chiasso was found to have handled money improperly. This led to new rules for banks to ensure they were careful with their clients' money.
Growth and Major Changes
In 1978, Credit Suisse partnered with First Boston to create Credit Suisse First Boston. They also bought a large share in First Boston's US operations. This partnership helped First Boston become very successful in Europe.
In 1988, Credit Suisse had to invest a lot of money to keep First Boston in business. This led to Credit Suisse taking over First Boston. This event was known as the "burning bed" deal because it was a difficult situation that required quick action to save the company.
In the late 1990s, Credit Suisse grew by buying many other companies. It acquired Bank Leu, Switzerland's oldest bank, in 1990. In 1993, it bought a large part of Swiss Volksbank. It also merged with Winterthur Group in 1997 and bought parts of other investment firms. In 2000, it purchased Donaldson, Lufkin & Jenrette for a large sum.
In 1996, Credit Suisse reorganized into four main parts: domestic banking, private banking, asset management, and corporate and investment banking. This change was meant to save money and improve how the company worked. In 1999, Japan's financial agency temporarily stopped one of Credit Suisse's divisions from operating there. This was due to issues with how it reported some financial activities.
In the 2000s, Credit Suisse continued to reorganize. By 2004, it adopted a "one bank" model. This meant all parts of the company worked together more closely. This helped its private banking division grow significantly. In 2006, Credit Suisse admitted to problems with helping some countries hide transactions from US authorities and paid a large settlement.
The bank also started using tools to check for environmental and social risks in its deals. In 2009, Credit Suisse faced lawsuits from some resorts. They claimed the bank created loans that could lead to the bank taking over their properties if they couldn't repay.
After the Financial Crisis
Credit Suisse handled the credit crisis better than many other banks. It didn't need to borrow money from the government. However, it later faced investigations from US authorities in 2012. These investigations were about how the bank handled some mortgage loans. After the crisis, Credit Suisse decided to focus more on managing money for wealthy clients. It also cut many jobs to save costs.
In the early 2000s, Credit Suisse faced several international investigations. These were about how some clients used bank accounts to avoid paying taxes. In 2012, German authorities found that some citizens were using Credit Suisse insurance policies to earn tax-free interest. In 2014, Credit Suisse agreed to pay a fine of $197 million for serving US clients without proper registration.
In May 2014, Credit Suisse admitted to problems with helping US citizens hide money to avoid taxes. It paid a $2.6 billion penalty. The US Attorney General stated that no financial institution, no matter its size, is above the law.
In 2015, Tidjane Thiam became the new CEO of Credit Suisse. In 2019, Credit Suisse launched a new "direct banking" unit. This was to offer digital banking products and attract younger clients. In 2020, the new CEO, Thomas Gottstein, announced more restructuring to reduce costs.
In February 2023, the bank reported a big loss of CHF 7.3 billion for the year. This was its largest loss since the 2008 financial crisis. In March 2023, Credit Suisse also said it found "material weaknesses" in how it controlled its financial reporting.
Collapse
On March 15, 2023, Credit Suisse's share price dropped sharply. This happened after its largest investor, Saudi National Bank, said it could not provide more money. The bank's bonds also lost a lot of value.
Credit Suisse tried to get help by taking a loan of 50 billion Swiss francs from the Swiss National Bank. It also tried to sell some of its properties. However, customers continued to withdraw their money, with billions of Swiss francs leaving the bank. The situation became so serious that the Swiss government and the Swiss National Bank started talking about another bank, UBS, buying Credit Suisse.
On March 19, 2023, UBS announced it would buy Credit Suisse for US$3.25 billion. This purchase was made to prevent a bigger financial crisis.
After the Acquisition
On June 27, 2023, UBS announced plans to cut more than half of Credit Suisse's employees.
In early September 2023, UBS saw a big profit from the takeover. Its stock value increased, and it reported a record profit of 29.2 billion CHF from April to July. This profit came from the difference between the price UBS paid for Credit Suisse and the higher value of Credit Suisse's assets.
Leadership
Credit Suisse has had many important leaders throughout its history. Alfred Escher founded the bank in 1856. Later leaders like Hermann Heller and August Rust helped the bank grow internationally and offer more types of services.
Chairpeople
- Otto Aeppli, 1977–1983
- Rainer Gut, 1983–2000
- Lukas Mühlemann, 2000–2002
- Walter Kielholz, 2003–2009
- Hans-Ulrich Doerig, 2009–2011
- Urs Rohner, 2011–2021
- António Horta-Osório, 2021–2022
- Axel Lehmann, 2022–present
Chief Executives
- Rainer Gut, 1977–1983
- Robert A. Jeker, 1983–1993
- Josef Ackermann, 1993–1996
- Lukas Mühlemann, 1997–2002
- John J. Mack, 2003–2004
- Oswald Grübel, 2003–2007
- Brady Dougan, 2007–2015
- Tidjane Thiam, 2015–2020
- Thomas Gottstein, 2020–2022
- Ulrich Körner, 2022–present
How the Company Worked
Credit Suisse Group AG was a company based in Zürich. It acted as a holding company, meaning it owned the Credit Suisse bank and other financial businesses. A board of directors, shareholders, and independent auditors managed the company. The board set the business plans and approved how employees were paid.
Credit Suisse had two main parts: Private Banking & Wealth Management, and Investment Banking. A Shared Services department helped all parts of the company with things like IT and marketing. Its operations were divided into four regions: Switzerland, Europe, the Middle East, and Africa, the Americas, and the Asian Pacific.
After the acquisition, Credit Suisse's banking operations continued under UBS. Its CEO, Ulrich Körner, joined UBS's executive board.
Who Owned Credit Suisse
In August 2022, it was known that the largest shareholder of Credit Suisse was an American company called Harris Associates. This company held over 10% of Credit Suisse's shares. Harris Associates itself is owned by a French bank, Natixis.
By January 2023, the Saudi National Bank was a major investor, holding 10% of the shares. The Qatar Investment Authority also increased its share to 6.87%. Harris Associates later sold all its shares by March 2023.
On March 19, 2023, UBS agreed to buy Credit Suisse for more than US$3 billion. This purchase helped prevent a bigger financial crisis, according to the Swiss National Bank.
Financial Products
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Credit Suisse aimed to be a single company that offered many different financial services. Its investment bank helped companies and wealthy individuals with large investments.
Credit Suisse created a special model called CreditRisk+ to assess the risk of loans. This model focused on the chance that a loan might not be repaid. A significant part of Credit Suisse's income came from its insurance business. These insurance products included car, home, life, and retirement plans. The bank also made good profits from its private banking services, which managed money for wealthy clients.
Credit Suisse was involved with hedge funds, which are special investment funds. It also managed financial tools that track stock market performance. The bank's investment managers often looked for stocks in finance, technology, and energy. They focused on companies that had good cash flow and those undergoing management changes.
Credit Suisse shared its investment advice in several publications, including Compass and Viewpoints.
In May 2023, Credit Suisse announced a deal to buy Ecuadorian bonds. This was a "debt-for-nature swap" where Ecuador promised to spend money on conservation in the Galapagos islands. This deal helped Ecuador with its public debt.
Reputation and Rankings
Credit Suisse was considered one of the world's most important banks. Its stability was seen as crucial for the international financial system. The bank was also recognized as one of Fortune Magazine's most admired companies.
In 2004, Credit Suisse was a top bank for high-yield transactions and for helping companies issue new stocks. By 2012, Euromoney magazine named Credit Suisse the world's best private bank. It was also ranked as the best bank in Switzerland. In 1995, it was recognized for its financial advice on company mergers and acquisitions.
However, the bank's reputation also faced challenges. Investigations in 2022 revealed that Credit Suisse had held accounts for some criminals and corrupt politicians.
After the takeover by UBS in September 2023, UBS's stock value increased significantly. This showed that UBS had benefited from acquiring Credit Suisse.
Work Environment
Credit Suisse was known for being more internationally focused than many other European banks. Employees often had opportunities to travel, take on more responsibility, and interact directly with clients. However, it was also known for long working hours, with some analysts reporting workweeks of 60 to 110 hours.
Despite the long hours, the work environment was generally described as pleasant. The bank offered good training and allowed new employees to access senior executives.
In 2023, the bank tried to pay bonuses to its top executives upfront. However, it added a condition that they had to stay with the bank for three years or repay some of the bonus. Later, the Swiss government and Credit Suisse shareholders voted to reduce or remove bonus payments for top management.
See also
- Banking in Switzerland
- Banco Garantia
- First Boston Corporation
