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From a Californian crisis in Zürich. How did we get here?

Once upon a time, there was a financial behemoth called Credit Suisse

Let's go back. In 1856, the SKA bank was founded. 

It is mainly active in corporate lending and will change its name to Credit Suisse. 

The bank developed its first branch network in Switzerland at the beginning of the twentieth century, and in 1940, the first foreign branch was opened in New York.

Until the early 2000s, Credit Suisse experienced considerable growth in its activities and assets. Despite this, its growth is not without reproach in terms of its ethics and governance. 

Its role during the Second World War, particularly at the expense of the Jewish community, tainted its history and a first financial scandal broke out in 1977 in the Chiasso affair. 

Despite internal warning signs, the company had a reprehensible control over its activities and was given criminal and financial penalties because of the establishment of a shell company in Lichtenstein. 

Despite this scandal, which damaged its reputation, Credit Suisse had nearly 85,000 employees worldwide at its peak. The bank was part of a small circle of international banks considered to be the most profitable. 

A global bank, it was also active in the insurance market, wealth management, leasing, etc.

It was therefore successful, but the lack of good governance caused it harm, again. 

What followed was a series of scandals, lawsuits and a game of musical chairs at its general assembly.

The subprime crisis, as well as the tax evasion of American citizens, led to billions in fines.

As a result, readjustments were made and the downsizing of staff all over the world was reduced.

In the early 2000s, its risky investment strategy took its toll with losses amounting to several billion francs. This loss was linked to the debacle of a US investment fund.

In recent years, Credit Suisse has published negative financial statements, the bank's share price has weakened, and it has not been able to restore its former reputation in the markets. 

Although its level of liquidity appears to be healthy, the bank remained in a weakened position in an uncertain economic and banking context...

SVB who?

Few of us heard about SVB until 2023. 

And yet, this bank would indirectly bring about the downfall of Credit Suisse.

The rise in interest rates decided by the US central bank, in order to counter inflation, prevented the bank's customers, mainly players and start-ups from the tech world, from obtaining loans on acceptable terms.

As a result, these same clients withdrew their assets to finance their projects, and SVB was forced to sell its portfolio bonds in order to have the necessary liquidity to cover these withdrawals. 

Unfortunately, the bonds in question no longer represented the same value as when they were purchased. Rising interest rates were also the cause.

The result? An accounting loss related to the forced sale of bonds and capital flight from its clients. 

To avoid a panic in the markets, the US authorities intervened quickly to guarantee the assets of the bank's customers. The worst was avoided, but the damage was done.

Since then, SVB has been taken over by its direct competitor. 

So what? What does this have to do with us?

Truth be told, the case of SVB is in no way similar to that of Credit Suisse. Banks of different sizes, on two different continents, one operating almost exclusively with the tech world... the ills of the SVB were peculiar to him.

However, in an interconnected financial world, one value that knows no borders is trust. The one dedicated to the entire banking sector was suddenly put to the test.

Banks are dependent on their reputation, on their ability to instill trust in their customers and investors. 

Credit Suisse had very little of this confidence. Its share price fell more violently than other banks...

The Saudi announcement. 

To make matters worse, one of the main shareholders (Saudi National Bank) announced that it did not want to invest further in the bank.

A press release that came at the worst possible time. Reasons other than financial were put forward but, once again, the damage was done.

Despite the reassuring words of Credit Suisse's management, despite the fact that SVB had nothing in common with the Swiss  bank, despite the actions taken by the SNB and  despite the commitment of thousands of employees, in Switzerland and around the world, the fate was sealed for the bank with two sails...

UBS.

UBS, the other Swiss banking giant, in collaboration with the country's political and financial authorities, reached an agreement to buy Credit Suisse. 

The worst will probably have been avoided, i.e. a total drop in confidence in the Swiss banking sector with a national and international spread, but there is no doubt that the image of the country and its institutions has suffered enormously. 

The professional future of thousands of employees is also at risk. 

If only the principle of good governance had been scrupulously respected; However, there were many warnings beforehand...

What about us? And you?

For the time being, nothing fundamentally changes. Neither for holders of a Credit Suisse or UBS account, nor for outstanding loans, whether in the form of a corporate loan or a consumer loan via one of the subsidiaries of the two banks.

If you have any doubts, please do not hesitate to contact us. Your advisor will be able to reassure you.

In these sometimes turbulent times, Milenia remains true to her values. 

Simplicity, responsibility, clarity and quality. These are all values that support our team in the management of your projects and in the allocation of responsible loans adapted to your financial reality. 

Even though we work to make your dreams a reality, caution is always required when putting together your file. In addition, we scrupulously respect the legal framework to ensure that your personal loan is a source of happiness and not worry.

So trust us. 

As Switzerland's leading credit player, we are a preferred partner of financial institutions in the market. 

We remain by your side, from  your credit application to the payment of your loan, and beyond.

A new law will come into force in 2022. It aims to further protect your sensitive data. We'll explain what's going to change.