As more time passes since Credit Suisse was forced by authorities into a marriage with UBS, the more contradictory the decision appears. This is especially true if one compares the fate of Credit Suisse with that of BSI in Ticino, finds Italian financial journalist Gabriele La Monica in an interview with finews.com.
The oldest bank in Ticino, Banca della Svizzera Italiana (BSI) was founded in Lugano in 1983. It closed in 2016 after its license was revoked by the Swiss Financial Market Supervisory Authority (Finma), because of the financial scandal surrounding the Malaysian sovereign wealth fund 1 Malaysia Development Berhad (1MDB).
The Malaysian Prime Minister at the time, Najib Razak, had embezzled some $4 billion and deposited the money in various Swiss banks, among others, including very large sums at BSI.
Particularly Serious Misconduct
Finma found «particularly serious misconduct» on the part of BSI, and accused it of serious deficiencies in the fight against money laundering. It approved the subsequent takeover of BSI by the Swiss private bank EFG International on the condition the Ticino-based financial institution be fully integrated into EFG and dissolved within twelve months.
Given the serious allegations against BSI, that is precisely what happened.
Harsh Maximum Penalty
«In retrospect and comparison to the scandals surrounding Credit Suisse, this maximum penalty imposed by Finma seems very harsh,» explains Italian financial journalist Gabriele La Monica in an interview with finews.com. He heads the Milan editorial office of the Italian news agency «Milano Finanza (MF)/Dow Jones».
It is against this background that Finma confirmed on March 15, that Credit Suisse still met regulatory capital and liquidity requirements for systemically important banks, a mere four days before its forced takeover by UBS on March 19.
Strong Accusations
A simple search of the archives shows that Finma should have acted resolutely much sooner, La Monica continues. In 2021, Credit Suisse was involved in the collapse of the US hedge fund Archegos Capital Management, which lost 5.5 billion Swiss francs. The US Securities and Exchange Commission (SEC) made strong accusations in its investigation, including extortion, money laundering, fraud, and market manipulation.
This was followed shortly afterward by the scandal involving the Greensill supply chain funds. In its investigation, Finma found that Credit Suisse made «partially false and overly optimistic statements» about its exposure to the investment vehicles. Even then, the facts established by the authorities left little room for any doubt about the scale of these frauds, La Monica stresses.
Warnings Ignored
Recall that a top Credit Suisse manager ignored the recommendations of an in-house risk manager after a series of irregularities were identified and warned against further lending. The stage for disaster was set.
In 2021, Greensill Capital, founded by Australian financier Lex Greensill, went bankrupt, leaving Credit Suisse with billions of dollars in losses. It has only recovered some of the client money it invested.
Cocaine Smuggling and Money Laundering
During its investigation, Finma found Credit Suisse «seriously breached its regulatory obligations to adequately identify, limit and control risks,» and yet a revocation of the banking license was never under discussion, La Monica states.
But there's more. On June 27 last year, the Federal Criminal Court in Bellinzona handed down a verdict in which Credit Suisse was found guilty of helping Bulgarian drug trafficker Evelin Banev launder money he earned smuggling cocaine. It was the first time that a banking institution in Switzerland was found guilty of money laundering.
Unjust Rescue
«The bailout of Credit Suisse from the point of view of those who at the time lost their livelihoods at the forcibly closed BSI, for the most part through no fault of their own, does indeed seem unfair. It gives the impression that Finma has applied double standards,» says La Monica.
