Investors at the deep dive in London get served little more than risk management and compliance platitudes. The most important question isn't answered.
There is only one question on everyone’s mind related to Switzerland’s second-largest bank. Can anything like the Greensill or Archegos debacles ever happen again?
The investor deep dive held by Credit Suisse Tuesday might have been an opportunity to answer that, but the main message coming out of it seemed to be «we have much more work to do».
Has Enough Been Done?
Even though the event started with more than enough unresolved emotional and financial baggage, the bank believed it important to start everything off with corporate pleasantries. It maintained it had reinforced its risk organization, established expectations for the first line of defense ownership, and developed a path forward for risk culture.
Given what has happened, you would clearly hope so. But, still, such phrases are commonly found in the annual reports of highly profitable global institutions that only need to make marginal improvements to their framework and processes, not one whose share price sits near all-time lows while it is about to report its second consecutive quarterly loss after the full-year one for 2021.
Escalation and Culture
They adopted a similar tone when it came to culture and escalation, indicating things like increased accountability between the first and the second line, stronger escalation protocols, risk-sensitive scorecards, and «reinforced training, communications and expectation setting».
It all sounds fine, but the tone is that an internal post-mortem following an annual review meeting with a major regulator, not a sizeable international bank trying to right the ship after almost foundering twice in near succession.
No Real Answer
When it came to reviewing clients, the improvements were there but they also sounded much like fine-tuning. New divisional and group client risk committees with clear criteria. More rigor in client onboarding and offboarding (or client exits), more accountability by the business, and «active challenge» from the second to the first line of defense.
But it all resonated the same way - that of a bank ably managing its business. Maybe that was the impression they had wanted to pass on. That could well be, but they just didn’t answer that only question everyone really wants to know the answer to. The one about Greensill and Archegos.
