Credit Suisse Group AG (, ) was a Swiss investment bank and financial services firm founded and based in Switzerland. Headquartered in Zürich, it had offices in all major financial centres around the world and provided services in investment banking, private banking, asset management, and shared services. It was known for strict bank–client confidentiality and banking secrecy. The Financial Stability Board considered it to be a global systemically important bank. Credit Suisse was also a primary dealer and Forex counterparty of the Federal Reserve in the United States.
Credit Suisse was founded in 1856 to fund the development of Switzerland's rail system. It issued loans that helped create Switzerland's electrical grid and the European rail system. In the 1900s, it began shifting to retail banking in response to the elevation of the middle class and competition from fellow Swiss banks UBS and Julius Bär. Credit Suisse partnered with First Boston in 1978 before buying a controlling share of the bank in 1988. From 1990 to 2000, the company purchased institutions such as Winterthur Group, Swiss Volksbank, Swiss American Securities Inc. (SASI), and Bank Leu.
The company was one of the least affected banks during the 2008 financial crisis but afterwards began shrinking its investment business, executing layoffs and cutting costs. The bank was at the center of multiple international investigations for tax avoidance (such as the famous "Suisse Secrets" scandal) which culminated in a guilty plea and the forfeiture of US$2.6 billion in fines from 2008 to 2012. By the end of 2022, Credit Suisse had approximately in assets under management.
On 19 March 2023, following negotiations with the Swiss government, UBS announced its intent to acquire Credit Suisse for $3.25 billion (CHF 3 billion) in order to prevent the bank's collapse. UBS completed the acquisition in June 2023. UBS intended for Credit Suisse to eventually be fully integrated, and by 31 May 2024 it was announced that Credit Suisse ceased to exist.
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. 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.
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