Jump to content

Credit Suisse: Difference between revisions

Coordinates: 47°22′11″N 8°32′22″E / 47.369602°N 8.539449°E / 47.369602; 8.539449
From Wikipedia, the free encyclopedia
Browse history interactively
← Previous editNext edit →
Content deleted Content added
VisualWikitext
→2000s: NPOV, Undue, chronology, etc. for predatory lending; now merged in a neutral way in proper chronology
→History: renaming sub-heads
Line 35: Line 35:
==History==
==History==


===1800s===
===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.<ref>{{citation|title =The Regulation and Nationalization of the Swiss Railways|author = Meyer, B. H. and Dietler, Hans|journal =Annals of the American Academy of Political and Social Science|volume =13|date=March 1899|pages =1–30|url =http://www.jstor.org/stable/1009453|ISSN =00027162|publisher =Sage Publications, Inc. in association with the American Academy of Political and Social Science}}</ref><ref name="MeierMarthinsen2012">{{cite book|author1=Henri B. Meier|author2=John E. Marthinsen|author3=Pascal A. Gantenbein|title=Swiss Finance: Capital Markets, Banking, and the Swiss Value Chain|url=http://books.google.com/books?id=bpKmVkdP360C&pg=PA89|accessdate=20 November 2012|date=1 October 2012|publisher=John Wiley & Sons|isbn=978-1-118-22508-0|pages=89–}}</ref> Escher founded Credit Suisse (originally called the Swiss Credit Institution) in 1856 primarily to provide domestic funding to railway projects, avoiding French banks that wanted to exert influence over the railway system.<ref name="nine"/> Escher aimed to start the company with three million shares and instead sold 218 million shares in three days.<ref name="FranksNunnally2010"/> The bank 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.<ref name="nine">{{cite book|author1=Manfred Pohl|author2=European Association for Banking History|title=Handbook on the History of European Banks|url=http://books.google.com/books?id=eXvfNDHpfWwC&pg=PA1016|accessdate=12 October 2012|year=1994|publisher=Edward Elgar Publishing|isbn=978-1-85278-919-0|pages=1016–}}</ref> In its first year of operation, 25 percent of the bank's revenues was from the [[Swiss Northeastern Railway]], which was being built by Escher's company, Nordostbahn.<ref name="swissbook"/>
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.<ref>{{citation|title =The Regulation and Nationalization of the Swiss Railways|author = Meyer, B. H. and Dietler, Hans|journal =Annals of the American Academy of Political and Social Science|volume =13|date=March 1899|pages =1–30|url =http://www.jstor.org/stable/1009453|ISSN =00027162|publisher =Sage Publications, Inc. in association with the American Academy of Political and Social Science}}</ref><ref name="MeierMarthinsen2012">{{cite book|author1=Henri B. Meier|author2=John E. Marthinsen|author3=Pascal A. Gantenbein|title=Swiss Finance: Capital Markets, Banking, and the Swiss Value Chain|url=http://books.google.com/books?id=bpKmVkdP360C&pg=PA89|accessdate=20 November 2012|date=1 October 2012|publisher=John Wiley & Sons|isbn=978-1-118-22508-0|pages=89–}}</ref> Escher founded Credit Suisse (originally called the Swiss Credit Institution) in 1856 primarily to provide domestic funding to railway projects, avoiding French banks that wanted to exert influence over the railway system.<ref name="nine"/> Escher aimed to start the company with three million shares and instead sold 218 million shares in three days.<ref name="FranksNunnally2010"/> The bank 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.<ref name="nine">{{cite book|author1=Manfred Pohl|author2=European Association for Banking History|title=Handbook on the History of European Banks|url=http://books.google.com/books?id=eXvfNDHpfWwC&pg=PA1016|accessdate=12 October 2012|year=1994|publisher=Edward Elgar Publishing|isbn=978-1-85278-919-0|pages=1016–}}</ref> In its first year of operation, 25 percent of the bank's revenues was from the [[Swiss Northeastern Railway]], which was being built by Escher's company, Nordostbahn.<ref name="swissbook"/>
Line 52: Line 52:
Throughout the late 1800s, Credit Suisse setup banking and insurance companies in [[Germany]], [[Brussels]], [[Geneva]] and others with Suisse as a shareholder of each company. It created insurance companies like Swiss RE, [[Swiss Life]], 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.<ref name="nine"/><ref name="swissbook"/>
Throughout the late 1800s, Credit Suisse setup banking and insurance companies in [[Germany]], [[Brussels]], [[Geneva]] and others with Suisse as a shareholder of each company. It created insurance companies like Swiss RE, [[Swiss Life]], 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.<ref name="nine"/><ref name="swissbook"/>


===1900s===
[[File:Schalterhalle SKA 1856.png|thumb|320px|The inside of a Credit Suisse building in the 1930s.]]In the early 1900s Credit Suisse began catering to consumers and the middle-class with deposit counters, currency exchanges and savings accounts.<ref name="swissbook"/> The first branch outside of Zurich was opened in 1905 in [[Basel]]<ref name="MeierMarthinsen2012"/> The bank helped companies effected by [[World War I]] restructure and extended loans for reconstruction efforts.<ref name="nine"/><ref name="Hill1999">{{cite book|author=Kelly Hill|title=Cases in Corporate Acquisitions, Buyouts, Mergers, and Takeovers|url=http://books.google.com/books?id=wJgrAQAAMAAJ|accessdate=20 November 2012|year=1999|publisher=Gale}}</ref> During the 1920s depression, net profits and dividends were halved and employees took salary cuts.<ref name="name">{{cite book
[[File:Schalterhalle SKA 1856.png|thumb|320px|The inside of a Credit Suisse building in the 1930s.]]In the early 1900s Credit Suisse began catering to consumers and the middle-class with deposit counters, currency exchanges and savings accounts.<ref name="swissbook"/> The first branch outside of Zurich was opened in 1905 in [[Basel]]<ref name="MeierMarthinsen2012"/> The bank helped companies effected by [[World War I]] restructure and extended loans for reconstruction efforts.<ref name="nine"/><ref name="Hill1999">{{cite book|author=Kelly Hill|title=Cases in Corporate Acquisitions, Buyouts, Mergers, and Takeovers|url=http://books.google.com/books?id=wJgrAQAAMAAJ|accessdate=20 November 2012|year=1999|publisher=Gale}}</ref> During the 1920s depression, net profits and dividends were halved and employees took salary cuts.<ref name="name">{{cite book
| last =Jöhr
| last =Jöhr
Line 85: Line 84:
| accessdate =August 27, 2012 }}</ref> The ''Agreement on the Swiss Banks' Code of Conduct with Regard to the Exercise of Due Diligence'' was created in the 1970s,<ref name="MeierMarthinsen2012"/> after a Credit Suisse branch in [[Chiasso]] was exposed for illegaly funneling $900 million in Italian deposits to speculative investments.<ref>"Suicide In Switzerland." Time 109.21 (1977): 82. MasterFILE Complete. Web. 21 Nov. 2012.</ref>
| accessdate =August 27, 2012 }}</ref> The ''Agreement on the Swiss Banks' Code of Conduct with Regard to the Exercise of Due Diligence'' was created in the 1970s,<ref name="MeierMarthinsen2012"/> after a Credit Suisse branch in [[Chiasso]] was exposed for illegaly funneling $900 million in Italian deposits to speculative investments.<ref>"Suicide In Switzerland." Time 109.21 (1977): 82. MasterFILE Complete. Web. 21 Nov. 2012.</ref>


==Acquisitions, growth and First Boston==
[[File:Credit Suisse logo c1972.png|150px|left|thumb|A logo from 1972]]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 percent stake in First Boston's US operations.<ref name="FranksNunnally2010"/> Other Credit Suisse First Boston brands were later created in Switzerland, Asia, London, New York and Tokyo.<ref name="secret">{{cite news
[[File:Credit Suisse logo c1972.png|150px|left|thumb|A logo from 1972]]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 percent stake in First Boston's US operations.<ref name="FranksNunnally2010"/> Other Credit Suisse First Boston brands were later created in Switzerland, Asia, London, New York and Tokyo.<ref name="secret">{{cite news
| last = Matthew
| last = Matthew
Line 153: Line 153:
| accessdate =August 27, 2012}}</ref>
| accessdate =August 27, 2012}}</ref>


===2000s===
[[File:Credit Suisse corporate headquarters Zürich, north view (2009).jpg|320px|thumb|Credit Suisse headquarters as of 2009.]] 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.<ref name="MeierMarthinsen2012"/> 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.<ref name="coverstory"/> Following the restructure Credit Suisse's private banking division grew 19 percent per year despite the economic crisis. The firm bumped long-time rival [[UBS]] off the number one position in Euromoney's private banking poll.<ref name="coverstory"/> In 2006 Credit Suisse acknowledged misconduct for helping Iran and other countries hide transactions from US authorities and paid a $536 million settlement.<ref>{{cite news|newspaper=The New York Times|title=Iranian Dealings Lead to a Fine for Credit Suisse|url=http://www.nytimes.com/2009/12/16/business/16bank.html|date=December 15, 2009|first=Claudio|last=Gatti|coauthors=John Eligon|accessdate=November 20, 2012}}</ref><ref name="wsj">{{citation | title= Credit Suisse's Secret Deals|newspaper=The Wall Street Journal|title=Credit Suisse May Revamp Asset-Management Unit|url=http://online.wsj.com/article/SB10001424052748704541004574600032631634884.html|first= Aaron|last=Luchetti|coauthors=Jay Solomon|date=December 17, 2009|accessdate=October 13, 2012}}</ref> 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.<ref>{{cite news|publisher=Bloomberg L.P.|url=http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amD2ilS42XvI&refer=europe|title=Credit Suisse to Merge Private Banks to Raise Profit (Update5)|first=Alice|last=Ratcliffe|date=April 27, 2006|accessdate=November 19, 2012}}</ref> In 2009 a bankruptcy court ruled in favor of [[Yellowstone Club]] founder [[Tim Blixseth]] after Credit Suisse engaged in predatory lending through inflated property valuations.<ref>[http://www.bloomberg.com/news/2011-04-06/yellowstone-club-founder-tim-blixseth-facing-forced-bankruptcy-over-taxes.html Tim Blixseth facing forced bankruptcy over taxes], Bloomberg News, April 6, 2011.</ref> This led to additional lawsuits by Tim Blixseth's son<ref>[http://www.businessweek.com/news/2012-02-19/cushman-wakefield-credit-suisse-sued-by-tim-blixseth.html Cushman Wakefield & Credit Suisse sued by Tim Blixseth], Businessweek, February 19, 2012.</ref> and a class action lawsuit seeking $24 billion in claims for similar bankruptcies of [[Tamarack Resort]], [[Lake Las Vegas]] and [[Ginn Resorts|Ginn Sur Mer]] resort.<ref>[http://www.lvbusinesspress.com/articles/2011/03/07/news/iq_42402470.txt Lake Las Vegas investors' lawsuit gets judge's approval to proceed] from Las Vegas Business Review March 7, 2011.</ref>
[[File:Credit Suisse corporate headquarters Zürich, north view (2009).jpg|320px|thumb|Credit Suisse headquarters as of 2009.]] 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.<ref name="MeierMarthinsen2012"/> 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.<ref name="coverstory"/> Following the restructure Credit Suisse's private banking division grew 19 percent per year despite the economic crisis. The firm bumped long-time rival [[UBS]] off the number one position in Euromoney's private banking poll.<ref name="coverstory"/> In 2006 Credit Suisse acknowledged misconduct for helping Iran and other countries hide transactions from US authorities and paid a $536 million settlement.<ref>{{cite news|newspaper=The New York Times|title=Iranian Dealings Lead to a Fine for Credit Suisse|url=http://www.nytimes.com/2009/12/16/business/16bank.html|date=December 15, 2009|first=Claudio|last=Gatti|coauthors=John Eligon|accessdate=November 20, 2012}}</ref><ref name="wsj">{{citation | title= Credit Suisse's Secret Deals|newspaper=The Wall Street Journal|title=Credit Suisse May Revamp Asset-Management Unit|url=http://online.wsj.com/article/SB10001424052748704541004574600032631634884.html|first= Aaron|last=Luchetti|coauthors=Jay Solomon|date=December 17, 2009|accessdate=October 13, 2012}}</ref> 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.<ref>{{cite news|publisher=Bloomberg L.P.|url=http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amD2ilS42XvI&refer=europe|title=Credit Suisse to Merge Private Banks to Raise Profit (Update5)|first=Alice|last=Ratcliffe|date=April 27, 2006|accessdate=November 19, 2012}}</ref> In 2009 a bankruptcy court ruled in favor of [[Yellowstone Club]] founder [[Tim Blixseth]] after Credit Suisse engaged in predatory lending through inflated property valuations.<ref>[http://www.bloomberg.com/news/2011-04-06/yellowstone-club-founder-tim-blixseth-facing-forced-bankruptcy-over-taxes.html Tim Blixseth facing forced bankruptcy over taxes], Bloomberg News, April 6, 2011.</ref> This led to additional lawsuits by Tim Blixseth's son<ref>[http://www.businessweek.com/news/2012-02-19/cushman-wakefield-credit-suisse-sued-by-tim-blixseth.html Cushman Wakefield & Credit Suisse sued by Tim Blixseth], Businessweek, February 19, 2012.</ref> and a class action lawsuit seeking $24 billion in claims for similar bankruptcies of [[Tamarack Resort]], [[Lake Las Vegas]] and [[Ginn Resorts|Ginn Sur Mer]] resort.<ref>[http://www.lvbusinesspress.com/articles/2011/03/07/news/iq_42402470.txt Lake Las Vegas investors' lawsuit gets judge's approval to proceed] from Las Vegas Business Review March 7, 2011.</ref>


==Post financial crisis==
According to the [[Wall Street Journal]], "Credit Suisse survived the credit crisis better than many competitors."<ref name="wsj"/> Credit Suisse had $902 million in writedowns for subprime holdings and the same amount for leveraged loans,<ref>{{cite news|title=Credit Suisse Plans to Expand Private Banking World-Wide|first=Goran| last=Mijuk |date=January 18, 2008|accessdate=October 21, 2012|url=http://online.wsj.com/article/SB120059427161198001.html}}</ref> but it did not have to borrow from the government.<ref name="Simonian">{{Cite news|url=http://www.ft.com/intl/cms/s/0/d5d0f486-f80b-11dd-aae8-000077b07658.html#axzz28iA6cpiH|title=Credit Suisse losses widen to SFr8bn - FT.com|last=Simonian|first=Haig|date=February 11, 2009|work=[[Financial Times]]|accessdate=9 October 2012}}</ref> Along with other banks, Credit Suisse was investigated and sued by US authorities for bundling mortgage loans with securities, misrepresenting the risks of underlying mortgages during the housing boom.<Ref>{{cite news|title=New York Sues Credit Suisse Over Mortgages|publisher=Reuters|date=November 20, 2012|accessdate=November 29, 2012|url=http://www.nytimes.com/2012/11/21/business/new-york-sues-credit-suisse-over-mortgage-backed-securities.html?_r=0}}</ref><ref>{{cite news
According to the [[Wall Street Journal]], "Credit Suisse survived the credit crisis better than many competitors."<ref name="wsj"/> Credit Suisse had $902 million in writedowns for subprime holdings and the same amount for leveraged loans,<ref>{{cite news|title=Credit Suisse Plans to Expand Private Banking World-Wide|first=Goran| last=Mijuk |date=January 18, 2008|accessdate=October 21, 2012|url=http://online.wsj.com/article/SB120059427161198001.html}}</ref> but it did not have to borrow from the government.<ref name="Simonian">{{Cite news|url=http://www.ft.com/intl/cms/s/0/d5d0f486-f80b-11dd-aae8-000077b07658.html#axzz28iA6cpiH|title=Credit Suisse losses widen to SFr8bn - FT.com|last=Simonian|first=Haig|date=February 11, 2009|work=[[Financial Times]]|accessdate=9 October 2012}}</ref> Along with other banks, Credit Suisse was investigated and sued by US authorities for bundling mortgage loans with securities, misrepresenting the risks of underlying mortgages during the housing boom.<Ref>{{cite news|title=New York Sues Credit Suisse Over Mortgages|publisher=Reuters|date=November 20, 2012|accessdate=November 29, 2012|url=http://www.nytimes.com/2012/11/21/business/new-york-sues-credit-suisse-over-mortgage-backed-securities.html?_r=0}}</ref><ref>{{cite news
| last =Freifeld
| last =Freifeld

Revision as of 15:50, 30 November 2012

47°22′11″N 8°32′22″E / 47.369602°N 8.539449°E / 47.369602; 8.539449

Credit Suisse Group AG
Company typeAktiengesellschaft
SIX: CSGN, NYSE: CS
IndustryFinancial services
Founded1856
FounderAlfred Escher
HeadquartersParadeplatz 8
Zurich, Switzerland
Area served
Worldwide
Key people
Urs Rohner (Chairman)
Brady Dougan (CEO)
ProductsInvestment and private banking, asset management
RevenueCHF 25.43 billion (2011)[1]
CHF 2.79 billion (2011)[1]
CHF 1.95 billion (2011)[1]
Total assetsCHF 1.229 trillion (end 2011)[1]
Total equityCHF 27.02 billion (end 2011)[1]
Number of employees
48,400 (FTE, end 2011)[1]
ParentUBS Edit this on Wikidata
Websitewww.credit-suisse.com

Credit Suisse Group AG is a Switzerland-based multinational financial services holding company headquartered in Zurich that operates the Credit Suisse Bank and other financial services investments. The company is organized as a stock corporation with four divisions: Investment Banking, Private Banking, Asset Management, and a Shared Services Group that provides marketing and support to the other three divisions.

Credit Suisse was founded by Alfred Escher in 1856 under the name Schweizerische Kreditanstalt (SKA, Template:Lang-en) in order to fund the development of Switzerland's rail system. It issued loans that helped create Switzerland's electrical grid, its currency system, its connection to the European rail system and funding for entrepreneurship . In the 1900s Credit Suisse began shifting to retail banking in response to the elevation of the middle-class and the growing popularity of savings accounts. Credit Suisse partnered with First Boston and, after a large failed loan, bought a controlling share in the bank. In the late 1900s, Credit Suisse acquired Donaldson, Lufkin & Jenrette, the Winterthur Group, Swiss Volksbank and Bank Leu among others.

The company restructured itself in 2002, 2004 and 2006. It was one of the least effected banks during the global financial crisis, but afterwards began shrinking its investment business, executing layoffs and cutting costs. During the period 2008 to 2012, Germany, Brazil and the United States began a series of investigations into the use of Credit Suisse accounts for tax evasion.

Corporate Structure

Credit Suisse headquarters in Zurich (Paradeplatz).

Credit Suisse Group AG is organized as a stock corporation registered in Zurich that operates as a holding company. It owns the Credit Suisse bank and other interests in the financial services business. Credit Suisse is governed by a board of directors, its shareholders and independent auditors. The Board of Directors organize the Annual General Meeting of Shareholders while investors with large stakes in the company determine the agenda. Shareholders elect auditors for one year terms,[2] approve the annual report and other financial statements, and by law have extensive authority.[2] Shareholders elect members of the board of directors to serve a three year term based on candidates nominated by the Chairman's and Governance committee and the Board of Directors meet six times a year to vote on company resolutions.[3] The Board sets Credit Suisse's business strategies and approves its compensation principles based on guidance from the compensation committee. It also has the authority to create committees that delegate specific management functions.

Credit Suisse has three divisions, Investment Banking, Private Banking, and Asset Management. A Shared Services department provides support functions like legal, IT and marketing to all three areas. Operations are divided into four regions: Switzerland, Europe, the Middle East and Africa, the Americas and the Asian Pacific. Credit Suisse Private Banking has wealth management, corporate and institutional businesses. Credit Suisse Investment Banking handles securities, investment research, trading, prime brokerage and capital procurement. Credit Suisse Asset Management sells investment classes, alternative investments, real-estate, equities, fixed income products and other financial products.[4]

History

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.[5][6] Escher founded Credit Suisse (originally called the Swiss Credit Institution) in 1856 primarily to provide domestic funding to railway projects, avoiding French banks that wanted to exert influence over the railway system.[7] Escher aimed to start the company with three million shares and instead sold 218 million shares in three days.[8] The bank 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.[7] In its first year of operation, 25 percent of the bank's revenues was from the Swiss Northeastern Railway, which was being built by Escher's company, Nordostbahn.[9]

Swiss Credit Institution's headquarters - 1895

Credit Suisse played a substantial role in the economic development of Switzerland. Suisse helped the country develop its currency system,[8] funded entrepreneurs[6] and invested in the Gotthard railway, which connected Switzerland to the European rail system in 1882.[7] 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.[10] 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."[7] The bank also helped fund the effort to disarm and imprison French troops that crossed into Swiss borders in the 1870 Franco-Prussian War.[7][9] By the end of the war, Credit Suisse had become the largest bank in Switzerland.[8]

Throughout the late 1800s, Credit Suisse setup banking and insurance companies in Germany, Brussels, Geneva and others with Suisse as a shareholder of each company. It created insurance companies like Swiss RE, Swiss Life, 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.[7][9]

The inside of a Credit Suisse building in the 1930s.

In the early 1900s Credit Suisse began catering to consumers and the middle-class with deposit counters, currency exchanges and savings accounts.[9] The first branch outside of Zurich was opened in 1905 in Basel[6] The bank helped companies effected by World War I restructure and extended loans for reconstruction efforts.[7][11] During the 1920s depression, net profits and dividends were halved and employees took salary cuts.[12] After World War II, a substantial portion of Credit Suisse's business was in foreign reconstruction efforts.[12] Holocaust survivors had problems trying to retrieve assets from relatives that died in concentration camps without death certificates.[13] This led to a class action lawsuit in 1996[14] that settled in 2000 for $1.25 billion.[15][16][17] The Agreement on the Swiss Banks' Code of Conduct with Regard to the Exercise of Due Diligence was created in the 1970s,[6] after a Credit Suisse branch in Chiasso was exposed for illegaly funneling $900 million in Italian deposits to speculative investments.[18]

Acquisitions, growth and First Boston

A logo from 1972

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 percent stake in First Boston's US operations.[8] Other Credit Suisse First Boston brands were later created in Switzerland, Asia, London, New York and Tokyo.[19][20] 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.[20] 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 bonds market crashed the following year, Gibbons couldn't repay First Boston.[8] Credit Suisse injected $725 million to keep First Boston in business,[21] 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-Steagal Act that requires separation between commercial and investment banks in order to preserve the stability of the financial markets.[8]

A logo from 1988

In the late 1900s Credit Suisse executed an aggressive acquisition strategy.[6] The bank acquired Bank Leu, known as Switzerland's oldest bank, in 1990.[22][23] In 1993 Credit Suisse outbid UBS for a controlling stake in Switzerland's fifth largest bank, Swiss Volksbank in a $1.1 billion deal.[24] It also merged with Winterthur Group in 1997 for about $9 billion[25] and acquired the asset management division of Warburg, Pincus & Co. in 1999 for $650 million.[26] Donaldson, Lufkin & Jenrette was purchased for $11.5 billion in 2000.[6][27]

In 1996 Credit Suisse restructured as the Credit Suisse Group with four divisions: Credit Suisse Volksbank 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.[28][29] While Credit Suisse First Boston had been struggling, Credit Suisse's overall profits had grown 20 percent over the prior year, reaching $664 million.[28] 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.[30]

Credit Suisse headquarters as of 2009.

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.[6] 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.[31] Following the restructure Credit Suisse's private banking division grew 19 percent per year despite the economic crisis. The firm bumped long-time rival UBS off the number one position in Euromoney's private banking poll.[31] In 2006 Credit Suisse acknowledged misconduct for helping Iran and other countries hide transactions from US authorities and paid a $536 million settlement.[32][33] 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.[34] In 2009 a bankruptcy court ruled in favor of Yellowstone Club founder Tim Blixseth after Credit Suisse engaged in predatory lending through inflated property valuations.[35] This led to additional lawsuits by Tim Blixseth's son[36] and a class action lawsuit seeking $24 billion in claims for similar bankruptcies of Tamarack Resort, Lake Las Vegas and Ginn Sur Mer resort.[37]

Post financial crisis

According to the Wall Street Journal, "Credit Suisse survived the credit crisis better than many competitors."[33] Credit Suisse had $902 million in writedowns for subprime holdings and the same amount for leveraged loans,[38] but it did not have to borrow from the government.[39] Along with other banks, Credit Suisse was investigated and sued by US authorities for bundling mortgage loans with securities, misrepresenting the risks of underlying mortgages during the housing boom.[40][41] Following the crisis, Credit Suisse cut more than one-trillion in assets and made plans to cut its investment banking arm 37 percent by 2014. It reduced emphasis on investment banking and focused on private banking and wealth management.[42][43] In July 2011, Credit Suisse cut 2,000 jobs in response to a weaker than expected economic recovery[44] and later merged its asset management with the private bank group to cut additional costs.[45]

A series of international investigations took place in the early 2000s regarding the use of Credit Suisse accounts for tax evasion. Two Brazilian investigations in 2008 led to 13 charges of current or former Suisse employees for a tax evasion scheme involving illegal wire transfers.[6] Four Credit Suissse bankers were accused of fraud by the US Justice Department in 2011 for helping wealthy Americans avoid taxes.[46][47] German authorities found that citizens were using insurance policies of a Bermuda-based Credit Suisse subsidiary to earn tax-free interest.[48] In November 2012, Credit Suisse's asset management division was merged with the private banking arm.[49]

Financial products

Credit Suisse Products
      Wealth management        

Estate planning

Insurance

Tax  planning

Philanthropy

  Investment products  

Foreign  exchange

Lending

Managed  accounts

Real  estate

      Investment banking        

Securities

Equity  products

M&A

Fixed income

Mutual funds

Hedge funds

    Investment advice    

Credit Suisse endorses a strategy called bancassurance of trying to be a single company that offers every common financial services product.[50] As of 2002 about 20 percent of Credit Suisse's revenue was from its insurance arm through its 1997 acquisition of Winterthus.[51]

Credit Suisse produces a hedge fund that follows European stock indices.[52] The fund is one of the six hedge fund indices commonly used to evaluate the performance of the markets.[53] Credit Suisse also has a 30 percent ownership in hedge fund investment firm York Capital Management. York sells hedge funds independently to its own clients, while Credit Suisse also offers them to private banking clients.[54] Credit Suisse produces the Dow Jones Credit Suisse long/short equity index.[53]

According to a 2011 article in SeekingAlpha, Credit Suisse's investment managers favor financial, technology and energy sector stocks.[55] The bank's head of equity investments in Europe said the team focuses on "value with an emphasis on free cashflow." She also has an interest in companies undergoing management changes that may influence the stock price.[56] According to a story in the Wall Street Journal, the head of Credit Suisse's International Focus Fund keeps a portfolio of only 40-50 stocks, instead of the industry-norm of more than 100.[57] Credit Suisse publishes its investment advice in four publications: Compass, Viewpoints, Research and the Credit Suisse Investment Committee Report.[58]

Reputation & rankings

Credit Suisse is a member of Wall Street's bulge bracket, a list of less than a dozen of the largest and most profitable banks. Suisse has been identified as one of the world's most important banks, whom international financial stability relies upon.[59][60] The bank is also one of Fortune Magazine's most admired companies.[61]

Credit Suisse has been recognized as the world's best private bank by Euromoney's Global Private Banking Survey[62] and as the best European Equity Manager by Global Investors.[56] In polls by Euromoney, it has been ranked as the top private bank and the best bank in Switzerland.[31] As of 2004, Credit Suisse was first in volume of high-yield transactions, second for corporate high-yield bond insurance and third for IPO underwriting.[63] The Securities Data Company ranked Credit Suisse as the fourth best place for financial advice for mergers and acquisitions in the US in 1995 and sixth for domestic equity issues.[28] Credit Suisse has been recognized by the Asset Triple A Awards. In 2005 Credit Suisse was ranked as the second best prime broker by Institutional Investor.[63]

See also

References

  1. ^ a b c d e f "Annual Results 2010" (PDF). Credit Suisse. Retrieved 10 February 2011.
  2. ^ a b "Articles of Association of Credit Suisse Group AG" (PDF). Credit Suisse. Retrieved November 20, 2012.
  3. ^ "Corporate Governance Guidelines of Credit Suisse AG" (PDF). Credit Suisse. Retrieved November 20, 2012.
  4. ^ "Organizational Guidelines and Regulations of Credit Suisse Group AG and of Credit Suisse AG" (PDF). Credit Suisse. Retrieved November 20, 2012.
  5. ^ Meyer, B. H. and Dietler, Hans (March 1899), "The Regulation and Nationalization of the Swiss Railways", Annals of the American Academy of Political and Social Science, 13, Sage Publications, Inc. in association with the American Academy of Political and Social Science: 1–30, ISSN 0002-7162{{citation}}: CS1 maint: multiple names: authors list (link)
  6. ^ a b c d e f g h Henri B. Meier; John E. Marthinsen; Pascal A. Gantenbein (1 October 2012). Swiss Finance: Capital Markets, Banking, and the Swiss Value Chain. John Wiley & Sons. pp. 89–. ISBN 978-1-118-22508-0. Retrieved 20 November 2012.
  7. ^ a b c d e f g Manfred Pohl; European Association for Banking History (1994). Handbook on the History of European Banks. Edward Elgar Publishing. pp. 1016–. ISBN 978-1-85278-919-0. Retrieved 12 October 2012.
  8. ^ a b c d e f Sandy Franks; Sara Nunnally (23 November 2010). Barbarians of Wealth: Protecting Yourself from Today's Financial Attilas. John Wiley & Sons. pp. 198–. ISBN 978-0-470-94658-9. Retrieved 20 November 2012.
  9. ^ a b c d Jung, Joseph (May 2000). The History of a Bank (in Translated from the original in German). NZZ Fretz AG, Schlieren. ISBN 3-85823-891-0.{{cite book}}: CS1 maint: unrecognized language (link)
  10. ^ William J. Hausman; Peter Hertner; Mira Wilkins (7 April 2008). Global Electrification: Multinational Enterprise and International Finance in the History of Light and Power, 1878-2007. Cambridge University Press. pp. 98–. ISBN 978-0-521-88035-0. Retrieved 20 November 2012.
  11. ^ Kelly Hill (1999). Cases in Corporate Acquisitions, Buyouts, Mergers, and Takeovers. Gale. Retrieved 20 November 2012.
  12. ^ a b Jöhr, Walter. Schweizerische Kreditanstalt 1856-1956. pp. Page 328 of 327–330. {{cite book}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  13. ^ Jung, Joseph (2002). Credit Suisse Group Banks in the Second World War: A Critical Review. Neue Zurcher Zeitung Publishing. ISBN 3-858239941.
  14. ^ Honan, William (April 16, 1999), Estelle Sapir, 73, Who Fought Bank Over Holocaust Assets, retrieved October 12, 2012
  15. ^ Atkinson, Mark (August 4, 2000), "Swiss banks agree $1.25bn Holocaust deal", The Guardian, retrieved October 12, 2012
  16. ^ Vischer, Frank (2001), Die Schweiz, der Nationalsozialismus und das Recht – La Suisse, le national-socialisme et le droit, ISBN 978-3-0340-0619-4
  17. ^ Andrews, Edmund (October 23, 1998). "INTERNATIONAL BUSINESS: When the Sure-Footed Stumble; Swiss Banks Stagger After Several Investing Missteps". The New York Times. Retrieved August 27, 2012.
  18. ^ "Suicide In Switzerland." Time 109.21 (1977): 82. MasterFILE Complete. Web. 21 Nov. 2012.
  19. ^ Matthew, Crabbe (January 1989). "Gut's Secret Plan". Euromoney. Retrieved August 27, 2012.
  20. ^ a b Greenhouse, Steven (April 10, 1989). "Swiss Bank Turns Aggressive". New York Times. pp. D1, D2. Retrieved August 27, 2012.{{cite news}}: CS1 maint: location (link)
  21. ^ Grant, Linda (August 19, 1996). "Will CS First Boston Ever Win?". Fortune. pp. 30, 34. Retrieved August 27, 2012.{{cite news}}: CS1 maint: location (link)
  22. ^ Cooper, R. "Gut Instincts." Forbes 148.8 (1991): 169-170. Business Source Complete. Web. 21 Nov. 2012.
  23. ^ "UPDATE 5-C.Suisse ends oldest Swiss bank brand Leu". Reuters. November 15, 2011. Retrieved November 21, 2012.
  24. ^ "Offer Made to Create Largest Swiss Bank Group". The New York Times. January 6, 1993. Retrieved November 21, 2012.
  25. ^ Olson, Elizabeth (June 21, 2002). "Credit Suisse's Insurance Unit To Get Infusion of $1.1 Billion". The New York Times. Retrieved November 30, 2012.
  26. ^ Gasparino, Charles (February 16, 1999). "Credit Suisse Agrees to Purchase Unit of Warburg Pincus for $650 Million". Wall Street Journal. p. B14. {{cite news}}: |access-date= requires |url= (help)CS1 maint: location (link)
  27. ^ Fairlamb, David (September 11, 2000). "This Bank Keeps Growing and Growing and ..." Business Week. p. 134. Retrieved October 3, 2012. {{cite news}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)CS1 maint: location (link)
  28. ^ a b c Tagliabue, John (November 29, 1996). "Taking the Challenge of Streamlining Credit Suisse". New York Times. pp. D9, D14. Retrieved August 27, 2012.{{cite news}}: CS1 maint: location (link)
  29. ^ "Credit Suisse Restructures". Banker. August 1996. {{cite news}}: |access-date= requires |url= (help)
  30. ^ Strom, Stephanie (July 30, 1999). "Japan Revokes Credit Suisse Unit's Banking License". New York Times. Retrieved August 27, 2012.
  31. ^ a b c Avery, H. (2010). Credit Suisse reaches the summit of private banking. (cover story). Euromoney, 41(490), 56-60.
  32. ^ Gatti, Claudio (December 15, 2009). "Iranian Dealings Lead to a Fine for Credit Suisse". The New York Times. Retrieved November 20, 2012. {{cite news}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  33. ^ a b Luchetti, Aaron (December 17, 2009), "Credit Suisse May Revamp Asset-Management Unit", The Wall Street Journal, retrieved October 13, 2012 {{citation}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  34. ^ Ratcliffe, Alice (April 27, 2006). "Credit Suisse to Merge Private Banks to Raise Profit (Update5)". Bloomberg L.P. Retrieved November 19, 2012.
  35. ^ Tim Blixseth facing forced bankruptcy over taxes, Bloomberg News, April 6, 2011.
  36. ^ Cushman Wakefield & Credit Suisse sued by Tim Blixseth, Businessweek, February 19, 2012.
  37. ^ Lake Las Vegas investors' lawsuit gets judge's approval to proceed from Las Vegas Business Review March 7, 2011.
  38. ^ Mijuk, Goran (January 18, 2008). "Credit Suisse Plans to Expand Private Banking World-Wide". Retrieved October 21, 2012.
  39. ^ Simonian, Haig (February 11, 2009). "Credit Suisse losses widen to SFr8bn - FT.com". Financial Times. Retrieved 9 October 2012.
  40. ^ "New York Sues Credit Suisse Over Mortgages". Reuters. November 20, 2012. Retrieved November 29, 2012.
  41. ^ Freifeld, Karen (October 4, 2012). "Exclusive: Credit Suisse probed over mortgages - sources". Reuters. Retrieved October 4, 2012. {{cite news}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  42. ^ Greil, Anita (September 26, 2012). "Credit Suisse May Revamp Asset-Management Unit". The Wall Street Journal. Retrieved November 29, 2012. {{cite news}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  43. ^ Kandell, Jonathan. "Swiss Banks Adjusting To Radical New Regulations." Institutional Investor 46.2 (2012): 33. Business Source Complete. Web. 21 Nov. 2012.
  44. ^ Muprhy, Megan (July 28, 2011). "Credit Suisse to axe 2,000 jobs". The Financial Times. Retrieved November 20, 2012.
  45. ^ Logutenkova, Elena (November 20, 2012). "Credit Suisse to Revamp Investment Banking, Private Bank". Retrieved November 29, 2012.
  46. ^ Browning, Lynnley (February 23, 2011). "U.S. Accuses Four Bankers Connected to Credit Suisse of Helping Americans Evade Taxes". The New York Times. Retrieved November 19, 2012. {{cite news}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  47. ^ Voreacos, David (August 15, 2011). "Credit Suisse May Settle U.S. Probe by Admitting Wrongdoing, Paying Fine". Bloomberg L.P. Retrieved November 20, 2012.
  48. ^ Crawford, David (July 11, 2012). "Clients of Swiss Bank Raided in Tax Probe". The Wall Street Journal. {{cite news}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  49. ^ Bart, Katharina (November 20, 2012). Reuters http://www.reuters.com/article/2012/11/20/us-credit-suisse-idUSBRE8AJ12O20121120. Retrieved November 23, 2012. {{cite news}}: Missing or empty |title= (help)
  50. ^ Langley, Alison (October 03, 2002). "Credit Suisse To Prop Up Insurer Unit". {{cite news}}: |access-date= requires |url= (help); Check date values in: |date= (help)
  51. ^ Jones, Sam (April 29, 2012). "Credit Suisse fund plans London float". Financial Times.
  52. ^ Jones, Sam (January 11, 2012). "Credit Suisse offers trades for eurozone shorting". Financial Times. {{cite news}}: |access-date= requires |url= (help)
  53. ^ a b Jones, Sam (November 17, 2012). "Investors grapple with sector's multiple choices". The Financial Times.
  54. ^ Strasburg, Jenny (September 15, 2010). "Credit Suisse Adds Heft in Hedge Fund as Rivals Exit". Retrieved November 29, 2012.
  55. ^ "Credit Suisse's Top Holdings: A Brief Analysis". March 29, 2011. Retrieved October 21, 2012.
  56. ^ a b Marshall, Julian. "Best European Equity Manager: Credit Suisse Asset Management." Global Investor 119 (1999): 15. Business Source Complete. Web. 21 Oct. 2012.
  57. ^ Ceron, Gaston (April 9, 2002). "Credit Suisse Fund Manager Tries to Do More With Less". The Wall Street Journal. pp. C27. {{cite news}}: |access-date= requires |url= (help)
  58. ^ Investment Strategy, Credit Suisse, retrieved November 21, 2012
  59. ^ Eavis, Peter (November 1, 2012). "The List That Big Banks Don't Wish to Be On". The New York Times. Retrieved November 21, 2012.
  60. ^ Update of group of global systemically important banks (PDF), Financial Stability Board, November 2, 2012, retrieved November 19, 2012
  61. ^ "Credit Suisse", World's Most Admired Companies, retrieved November 21, 2012
  62. ^ Credit Suisse retains crown as top global private bank in benchmark Euromoney survey, Euromoney, February 7, 2012, retrieved November 29, 2012
  63. ^ a b Loosvelt, Derek (2007). Vault Guide to the Top Financial Services Employers. Vault. p. 134.
Wikimedia Commons has media related to Credit Suisse.
Retrieved from "https://en.wikipedia.org/enwiki/w/index.php?title=Credit_Suisse&oldid=525715103"