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The story
Founded by Alfred Escher in 1856.1
Early history
Credit Suisse's founder, Alfred Escher, was called "the spiritual father of the railway law of 1852" for his work defeating the idea of a state-run railway system in Switzerland in favor of privatization. Escher founded Credit Suisse (originally called the Swiss Credit Institution, i.e., Schweizerische Kreditanstalt) jointly with Allgemeine Deutsche Credit-Anstalt on 5 July in 1856 primarily to provide domestic funding to railway projects, avoiding French banks that wanted to exert influence over the railway system. Escher aimed to start the company with three million shares and instead sold 218 million shares in three days. The bank opened on 16 July 1856 and was modeled after Crédit Mobilier, a bank funding railway projects in France that was founded two years prior, except Credit Suisse had a more conservative lending policy focused on short-to-medium-term loans. In its first year of operation, 25% of the bank's revenues were from the Swiss Northeastern Railway, which was being built by Bruno Hildebrand and Escher's company, Nordostbahn.
Credit Suisse played a substantial role in the economic development of Switzerland, helping the country develop its currency system, funding entrepreneurs and investing in the Gotthard railway, which connected Switzerland to the European rail system in 1882. Credit Suisse helped fund the creation of Switzerland's electrical grid through its participation with Elektrobank (now called Elektrowatt), a coalition of organizations that co-financed Switzerland's electrical grid. According to The Handbook on the History of European Banks, "Switzerland's young electricity industry came to assume the same importance as support for railway construction 40 years earlier." The bank also helped fund the effort to disarm and imprison French troops that crossed into Swiss borders in the 1870 Franco-Prussian War. By the end of the war, Credit Suisse had become the largest bank in Switzerland.
Throughout the late 1800s, Credit Suisse set up banking and insurance companies in Germany, Brussels, Geneva, and others (as SKA International) with the bank as a shareholder of each company. It created insurance companies like Swiss RE, Swiss Life (aka Rentenanstalt), and Schweiz. Credit Suisse had its first unprofitable year in 1886, due to losses in agriculture, venture investments, commodities, and international trade. The bank created its own sugar beet factory, bought 25,000 shares in animal breeding ventures, and supported an export business, Schweizerische Exportgesellschaft, that experienced heavy losses for over-speculative investing.
In the early 1900s Credit Suisse began catering to consumers and the middle class with deposit counters, currency exchanges, and savings accounts. The first branch outside of Zürich was opened in 1905 in Basel. The bank helped companies affected by World War I restructuring and extended loans for reconstruction efforts. During the 1920s depression, net profits and dividends were halved, and employees took salary cuts. After World War II, a substantial portion of Credit Suisse's business was in foreign reconstruction efforts. Banks subsequently acquired by Credit Suisse have been linked to bank accounts used by members of the NSDAP in the 1930s. Holocaust survivors had problems trying to retrieve assets from relatives that died in concentration camps without death certificates. This led to a class action lawsuit in 1996 that settled in 2000 for $1.25 billion. The Agreement on the Swiss Banks' Code of Conduct with Regard to the Exercise of Due Diligence was created in the 1970s, after a Credit Suisse branch in Chiasso was exposed for illegally funneling $900 million in Italian deposits to speculative investments.
Acquisitions, growth and First Boston
In 1978, White, Weld & Company dropped its partnership with Credit Suisse after it was bought by Merrill Lynch. To replace the partnership with White, Credit Suisse partnered with First Boston to create Credit Suisse First Boston in Europe and bought a 44% stake in First Boston's US operations.
In 1987, the Group acquired the blue-chip London stockbrokers Buckmaster & Moore, originally established by aristocrat Charles Armytage-Moore and sportsman Walter Buckmaster, who had met at Repton School. As stockbrokers they were very well connected and had developed a good private client business, which at one time included John Maynard Keynes.
Other Credit Suisse First Boston brands were later created in Switzerland, Asia, London, New York, and Tokyo. According to an article in The New York Times, First Boston became "the superstar of the Euromarkets" by buying stakes in American companies that wanted to issue bonds. In 1988, First Boston loaned $487 million to Gibbons and Green for the purchase of the Ohio Mattress Company, which was purchased at twenty times its annual revenue. Gibbons had also borrowed $475 million in junk bonds. When the junk bond market crashed the following year, Gibbons couldn't repay First Boston. Credit Suisse injected $725 million to keep First Boston in business, which ultimately led to the company being taken over by Credit Suisse. This became known as the "burning bed" deal, because the Federal Reserve overlooked the Glass–Steagall Act that requires separation between commercial and investment banks in order to preserve the stability of the financial markets.
In the 1990s, Credit Suisse investigated Jewish-held accounts that had been stolen by Nazis or orphaned by victims of the Holocaust. In 1996 and 1997, both the Bergier Commission and the Volcker Committee made similar inquiries. Credit Suisse, UBS, and other Swiss banks paid US$1.288 billion in settlements to 458,400 Holocaust victims and 198,000 victims of the class action lawsuit. In the 2020s, the existence of hundreds of other Nazi-tied accounts was reported.
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In 1996, Credit Suisse restructured as the Credit Suisse Group with four divisions: Credit Suisse Volksbank (later called Credit Suisse Bank) for domestic banking, Credit Suisse Private Banking, Credit Suisse Asset Management, and Credit Suisse First Boston for corporate and investment banking. The restructure was expected to cost the company $800 million and result in 7,000 lost jobs but save $560 million a year. While Credit Suisse First Boston had been struggling, Credit Suisse's overall profits had grown 20% over the prior year, reaching $664 million. In 1999 Japan's Financial Supervisory Agency temporarily suspended the financial-products division's license to operate in Japan for "window dressing," the practice of selling derivatives that are often used by bank clients to hide losses.
In the late 1990s, Credit Suisse executed an aggressive acquisition strategy. The bank acquired Bank Leu, known as Switzerland's oldest bank, in 1990. In 1993 Credit Suisse outbid UBS for a controlling stake in Switzerland's fifth-largest bank, Swiss Volksbank, in a $1.1 billion deal. It also merged with Winterthur Group in 1997 for about $9 billion and acquired the asset management division of Warburg, Pincus & Co. in 1999 for $650 million. Donaldson, Lufkin & Jenrette was purchased for $11.5 billion in 2000.
In the 2000s, Credit Suisse executed a series of restructures. In 2002 the bank was consolidated into two entities: Credit Suisse First Boston for investments and Credit Suisse Financial Services. A third unit was added in 2004 for insurance. Credit Suisse restructured again in 2004 under what it calls the "one bank" model. Under the restructuring, every board had a mix of executives from all three divisions. It also changed the compensation and commission models to encourage cross-division referrals and created a "solution partners" group that functions between the investment and private banking divisions. Following the restructure, Credit Suisse's private banking division grew 19% per year despite the economic crisis. The firm bumped long-time rival UBS off the number one position in Euromoney's private banking poll. In 2006, Credit Suisse acknowledged misconduct for helping Iran and other countries hide transactions from US authorities and paid a $536 million settlement. The same year it merged Bank Leu AG, Clariden Holding AG, Bank Hofmann AG and BGP Banca di Gestione Patrimoniale into a new company called Clariden Leu.
Credit Suisse claims to operate a process which since 2007 uses RepRisk, a Swiss provider of ESG Risk analytics and metrics, to screen and evaluate environmental and social risks of risky transactions and due diligence.
In 2009, Yellowstone Club founder Tim Blixseth sued Credit Suisse when the bank attempted to collect on $286 million in loan debt during Yellowstone's bankruptcy proceedings. The debtor had borrowed more than $300 million for the business, but used a large portion of it for personal use before eventually filing for bankruptcy. Four lawsuits were filed from other resorts seeking $24 billion in damages alleging Credit Suisse created loans with the intention of taking over their properties upon default.
2009–2024
According to The Wall Street Journal in 2008, "Credit Suisse survived the credit crisis better than many competitors." Credit Suisse had $902 million in write-downs for subprime holdings and the same amount for leveraged loans, but it did not have to borrow from the government. Along with other banks, Credit Suisse was investigated and sued by US authorities in 2012 for bundling mortgage loans with securities and misrepresenting the risks of underlying mortgages during the housing price boom. Following the crisis, Credit Suisse cut more than one-trillion in assets and made plans to cut its investment banking arm 37% by 2014. It reduced emphasis on investment banking and focused on private banking and wealth management. In July 2011, Credit Suisse cut 2,000 jobs in response to a weaker-than-expected economic recovery and later merged its asset management with the private bank group to cut additional costs.
A series of international investigations took place in the early 2000s regarding the use of banking secrecy in Credit Suisse accounts for tax evasion. In 2008, the Brazilian government investigated 13 former and current Credit Suisse employees. The investigation led to arrests that year and in 2009 as part of a larger crackdown in Brazil. Four Credit Suisse bankers were accused of fraud by the US Justice Department in 2011 for helping wealthy Americans avoid taxes. In 2012, German authorities found that citizens were using insurance policies of a Bermuda-based Credit Suisse subsidiary to earn tax-free interest.
In November 2012, Credit Suisse's asset management division was merged with the private banking arm. In September 2012, the Swiss government gave banks like Credit Suisse permission to provide information to the US Justice Department for tax evasion probes. In February 2014, it agreed to pay a fine of $197 million after one of its businesses served 8,500 US clients without registering its activities, leading to suspicion as to whether it was helping Americans evade taxes. It was one of 14 Swiss banks under investigation. Separately, in 2013, German authorities began to probe Credit Suisse, its private bank subsidiary Clariden Leu, and its regional subsidiary Neue Aargauer Bank for helping German citizens evade taxes. In 2012, the bank eventually entered into a €150 million settlement with the government.
In March 2014, Credit Suisse denied claims it had been drawn into a Swiss competition probe investigating potential collusion to manipulate foreign exchange rates (Forex scandal) by various Swiss and foreign banks. In May 2014, Credit Suisse pleaded guilty to conspiring to aid tax evasion. It was the most prominent bank to plead guilty in the United States since Drexel Burnham Lambert in 1989 and the largest to do so since the Bankers Trust in 1999. "Credit Suisse conspired to help US citizens hide assets in offshore accounts to evade paying taxes. When a bank engages in misconduct this brazen, it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as has happened here," Attorney General Eric Holder said at the time. Holder also said, "This case shows that no financial institution, no matter its size or global reach, is above the law."
In March 2015, it was announced that Tidjane Thiam, the CEO of Prudential would leave to become the next CEO of Credit Suisse. In September 2016, Brian Chin was appointed Chief Executive of Global Markets and joined the executive board of the bank. At this time, it was also announced that Eric M. Varvel was appointed president and CEO of Credit Suisse Holdings (USA).
The collapse of Lehman Brothers resulted in a significant decline in trust and confidence among consumers and market participants in the banking industry. The loss in confidence is reflected in the large loss of share prices across the Swiss banking sector after 2008.
In August 2019, Credit Suisse announced the formation of a new "direct banking" business unit under its Switzerland division (Swiss Universal Bank, SUB), focusing on digital retail products. The step is seen as a reaction to the emergence of FinTech competitors such as N26 or Revolut in Switzerland and shall help to better attract young clients. In July 2020, Thomas Gottstein, the new CEO of the company, announced restructuring; it was influenced as a result of the trading surge in Q2 of 2020, amid the COVID-19 pandemic. The planned restructuring is set "to reduce costs and improve efficiencies" and features some reverts of alterations brought by the previous CEO, Thiam. According to Gottstein, "These initiatives should also help to provide resilience in uncertain markets and deliver further upside when more positive economic conditions prevail."
In November 2022, Credit Suisse announced that it was selling the majority of its Securitized Products Group to Apollo Global Management. Credit Suisse cited a reduction in Risk-weighted assets as the primary factor driving the sale. The deal was expected to close in the first half of 2023. The spin-off was branded Atlas SP, and the deal was ultimately finalized in March 2024.
In December 2022, Credit Suisse completed a CHF 4.00 bn capital increase by way of a CHF 2.24 bn rights issue and a CHF 1.80 bn private placing.
On 9 February 2023, the bank reported an annual loss of CHF 7.3bn, the biggest loss since the 2008 financial crisis. On 14 March of that same year, Credit Suisse published its annual report for 2022, saying it had identified "material weaknesses" in controls over financial reporting.
Collapse
On 15 March 2023, Credit Suisse' share price dropped nearly 25% after Saudi National Bank, its largest investor, said it could not provide more financial assistance. The market price of the bank's unsecured bonds set for maturity in 2027 dropped to a low of 33% of their par value on that day, down from being valued at 90% of their par value at the beginning of the month.
Later in the same week, Credit Suisse sought to shore up its finances by taking a loan of 50 billion Swiss francs from the Swiss National Bank (SNB); the bank later proceeded to buy three billion Swiss francs of its own debt and to put the Baur en Ville hotel in Zürich for sale. However, this intervention did not stop investors and customers from pulling their money out of Credit Suisse, with outflows topping 10 billion Swiss francs during the week, and almost $69 billion (approximately 61 billion Swiss francs) in withdrawals during the first calendar quarter. The situation was so compromised that the SNB and the Swiss government started discussions to fast-track the bank's acquisition by UBS. On 19 March 2023, UBS announced a deal had been reached to acquire Credit Suisse for US$3.25 billion (CHF 3 billion) in an all-stock deal.
In the course of the takeover negotiations, the Swiss Financial Market Supervisory Authority (FINMA) issued an order requiring that the Additional Tier 1 (AT1) instruments classified as Tier 1 capital issued by Credit Suisse be fully written down, thereby rendering them worthless. European regulators have criticized the moral hazard of the AT1 bondholders suffering in the loss of their capital rather than the shareholders of the bank. Shortly after the write-off, various bondholders, represented by Quinn Emanuel Urquhuart & Sullivan and its Managing Partner Prof. Dr. Thomas Werlen, have handed in an official complaint against FINMA's administrative order in front of the Federal Administrative Court of Switzerland. In June 2024, a group of Credit Suisse bondholders holding $82 million worth of the bank's AT1 debt filed a lawsuit against Switzerland seeking compensation. They were also represented by the law firm Quinn Emanuel Urquhart & Sullivan and its partner, Dennis Hranitzky. On 14 October 2025, in a partial ruling, the Federal Administrative Court in St. Gallen fully upheld the appeal brought by the plaintiffs represented by attorney Prof. Dr. Thomas Werlen and held that FINMA had lacked any legal basis for ordering the write-down. FINMA and UBS (as the universal legal successor to Credit Suisse) subsequently filed an appeal, which means that the AT1 matter will now proceed before the Federal Supreme Court.
According to financial analysts, economic sanctions imposed by Switzerland on Russian individuals and businesses had a significant impact on the demise of the bank. According to Bloomberg News, Credit Suisse held about $33 billion for Russian clients, 50% more than UBS.
In late April 2023, the political and economic fallout had been evaluated by a number of economic analysts, particularly the resulting lack of banking competition in Switzerland's economy. The takeover by UBS had limited the choice of lenders, particularly for small and medium-sized companies. Credit Suisse's international reach had affected the employment situation in Europe as well as other regions. The Swiss economy as such also relies on a number of heavily capitalised state banks that have been a significant lender to those smaller enterprises, particularly after the demise of CS.
Post-acquisition
On 27 June 2023, UBS announced its intention to cut more than half of Credit Suisse's workforce. In July 2024, Credit Suisse (Schweiz) ceased to exist as a separate legal entity after fully being integrated into UBS Switzerland.
In 2023, the Credit Suisse unit in Singapore was ordered to pay $743 million to Georgian billionaire Bidzina Ivanishvili for fraud.
From Wikipedia’s article on Credit Suisse, shared under CC BY-SA 4.0.8