António Horta-Osório tries to cheer up: "We are determined to learn the right lessons and to expand our control functions so that we are better positioned in the future," said the new Chairman of the Board of Directors of Credit Suisse (CS) on Thursday. The reason for the Portuguese's promise of a better future for the major Swiss bank was the submission of the investigation report on the great fiasco around Archegos. Business with this New York gambling den brought CS losses of 5 billion francs in the first half of 2021. A number of other banks have also got a bloody nose in this so-called prime services business with Archegos. But the Swiss brought in by far the highest losses,by providing the Archegos owner Bill Hwang with billions in loans for his daring stock market bets. When these went terribly wrong, CS was left with the losses mentioned due to a lack of adequate coverage.

Johannes Ritter

Correspondent for politics and business in Switzerland.

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An American law firm examined the case on behalf of the CS Board of Directors. The 172-page report published by CS on Thursday bears devastating testimony to the bank: “The losses suffered by CS in relation to Archegos are the result of a fundamental failure of the management and controls in the CS investment bank and especially in their prime services business. The deal was geared towards maximizing short-term profits and not slowed Archegos 'willingness to take risks, it made it possible. ”According to the auditors, there were numerous warning signs that indicated that Archegos' concentrated, volatile and very under-margin swap positions were potentially catastrophic Posed a risk to the CS.But these signs were not heeded "although there is evidence that some people have raised their concerns in an appropriate manner".

According to the auditors, there was no malicious or fraudulent intent behind the failure. There was also apparently nothing to complain about in the basic architecture of the risk controls and risk systems. The problem was that the employees involved did not adhere to the existing rules and guidelines. The report speaks of "significant deficiencies in the risk culture of CS". In its assessment of the investigation report, the bank speaks of an "insufficient fulfillment of supervisory obligations" in the investment bank and in risk management. The auditors recommend that CS develop a corporate culture "in which all employees at all levels see themselves as risk managers who are responsible for identifying,are responsible for the action and escalation of risks and are strictly accountable for failure to perform their risk management tasks ”.

CS CEO Thomas Gottstein castigated the Archegos debacle as "unacceptable". He himself only found out about it when the case surfaced in the press. Until then, he did not even know about the existence of Archegos, said the Swiss in a conference call with journalists. He is now responsible for drawing the necessary conclusions. In the meantime, the risks in the investment bank have been significantly reduced and the risk systems sharpened and strengthened.

Nine employees had to go in connection with Archegos, including risk chief Lara Warner. 23 employees involved are now missing out on $ 70 million in bonuses. The case made it clear that “we have to deal with our corporate culture,” writes the bank. This is a new finding: when Gottstein moved to the top of CS one and a half years ago after an internal spying affair, he had asserted that the corporate culture was good and strong.

Because of the additional depreciation in connection with Archegos, the net profit of the CS dropped in the second quarter by 78 percent to 253 million francs. In asset management, a net outflow of CHF 4.7 billion in customer funds. Some customers in Asia have been parted with, it was said to justify. In fact, the decline is also likely to reflect a certain loss of reputation, especially since CS is also causing annoyance for many customers with its Greensill supply chain financing fund.