Tag: Credit Suisse (Page 1 of 5)

Swiss Regulator CEO Now Resigns in Wake of Banking Crisis

Market News Today - Swiss Regulator CEO Now Resigns in Wake of Banking Crisis.
Market News Today – Swiss Regulator CEO Now Resigns in Wake of Banking Crisis.

The Swiss Financial Regulator ‘FINMA’ CEO has now resigned in wake of today’s banking crisis, reports Reuters.

“The head of Switzerland’s financial watchdog FINMA has resigned nearly six months after the body drew heavy criticism for failing to prevent the collapse of Credit Suisse.”

Urban Angehrn will step down at the end of September 2023, FINMA said in a statement on Wednesday.

Angehrn, who has led the regulator since November 2021, said he was quitting for health reasons.

“Being able to contribute to the sustainable improvement of the quality of the Swiss financial centre as CEO of FINMA was a unique challenge for me, and one that I tackled with all my might,” Angehrn said.

“However, the high and permanent stress level had health consequences. I have considered my decision carefully and have now decided to step down.”

FINMA said Deputy CEO Birgit Rutishauser will act as interim CEO from Oct. 1.

“The Board of Directors very much regrets this decision and would like to thank Urban Angehrn for his lasting contribution to FINMA during an exceptionally challenging period,” the statement said.

The regulator has come under fire for failing to act sooner, or more effectively, to halt the string of scandals at Credit Suisse in recent years.

“Swiss media has accused FINMA of being too cautious around Switzerland’s large banks, which they reported did not take the regulator seriously.

Credit Suisse for example gave FINMA false and overly positive statements about its business relationship with financier Lex Greensill, the regulator said earlier this year.

The bank’s dealings with Greensill eventually caused a 1.6 billion Swiss franc ($1.80 billion) loss for what was formerly Switzerland’s second-largest lender.

FINMA also communicated poorly and assigned too few people to oversee the big banks, local media reported.

From a staff of 550 people, the core supervisory team for Credit Suisse was only five people, although this was expanded last year.”

Also Read: A US Bank is Now Holding Retirees SS Money Hostage

Investors Urge Prison Time for Board of Directors at Credit Suisse

Market News Today - Swiss Regulator CEO Now Resigns in Wake of Banking Crisis.
Market News Today – Swiss Regulator CEO Now Resigns in Wake of Banking Crisis.

In April it was reported that Credit Suisse investors urged for the board of directors to face prison time after they blocked executive pay plans during the final ever annual meeting.

According to The Guardian, shareholders used most of the nearly five-hour annual general meeting in Zurich – the last in the 167-year-old bank’s history – to voice fury over poor management, hitting out at excessive pay for “incompetent and greedy” bankers who they said took too many risks and endangered Switzerland’s economic prosperity.

In November of 2022, the bank warned investors in a 6-K filing of potential losses due to naked short covering.

Credit Suisse took a massive hit of $4.09 billion in Q3 and hinted at occurring losses in an upturn in markets.

The bank hired 20 banks for a $4 billion injection in effort to pivot from Q3’s disaster and also postponed publication of its annual report earlier this year, per Reuters.

This led clients to withdraw billions of dollars, sending shares on a freefall.

Even after the bank was bailed out, investors continued to pull their money out.

UBS agreed to buy Credit Suisse but sources say 10,000 jobs would have to be cut once the two banks combined.

Also Read: Chase Customers Now Unable to Access Money Through ATMs

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Market News Today - Swiss Regulator CEO Now Resigns in Wake of Banking Crisis.
Market News Today – Swiss Regulator CEO Now Resigns in Wake of Banking Crisis.

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UBS Will Now Pay Whopping $1.44bn for Defrauding Investors

Market News Daily - UBS Will Now Pay Whopping $1.44bn for Defrauding Investors.
Market News Daily – UBS Will Now Pay Whopping $1.44bn for Defrauding Investors.

UBS will now pay a whopping $1.44bn settlement to the Department of Justice for allegedly defrauding its investors who bought bonds backed by mortgages before the financial crisis.

“The case is the last among more than a dozen DOJ prosecutions against banks and other financial institutions over securities backed by subprime loans, the agency said.

Including the UBS case, the DOJ said it reached more than $36 billion in all via settlements with banks including Bank of America, Citigroup and HSBC. Credit Suisse, now owned by UBS, paid $5.3 billion in 2016,” states WSJ.

“You dance with the devil and sell your soul,” an employee wrote about doing business with one of the lenders.

Another described a pool of loans as a “bag of s—.”

UBS initially had argued that it also was a big loser on mortgage-backed bonds and related assets, but failed in an effort to get the lawsuit dismissed.

The bank had to be bailed out by the Swiss government in 2008, largely because of losses related to those mortgage bonds.

UBS in 2018 said it invested $100 billion in the assets and lost more than $45 billion, including nearly $900 million on the deals in the DOJ complaint. 

“Subprime mortgage securities helped to fuel a housing boom and bust that sent the economy into its deepest economic downturn since the Great Depression.

In 2012, the DOJ put together a task force of federal and state agencies to prosecute banks and other involved parties,” said WSJ.

UBS stock is currently up more than +24% this year-to-date.

Also Read: Credit Suisse is Now Getting Sued Over a Margin Call

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UBS/Credit Suisse Faced $388m in Fines Just Weeks Ago

Market News Daily - UBS Will Now Pay Whopping $1.44bn for Defrauding Investors.
Market News Daily – UBS Will Now Pay Whopping $1.44bn for Defrauding Investors.

UBS and Credit Suisse faced a whopping $388 million in fines in late July according to the latest financial reports and data.

Credit Suisse has been issued fines totaling $388 million for “significant failures in risk management and governance between 1 January 2020 and 31 March 2021”.

The fines are the result of a co-ordinated investigation between the UK’s Prudential Regulation Authority (PRA), the Swiss Financial Market Supervisory Authority (FINMA) and the US Federal Reserve.

UBS Group AG says it will pay $269 million to the Federal Reserve and a further $119 million to the PRA.

The latter fine was reduced from $160 million for the bank’s co-operation in resolving the issue.

The issue arose out of Credit Suisse’s dealings with the former US asset management firm Archegos Capital Management, to which it provided prime brokerage services and engaged in equity total return swaps (TRS).

However, when the asset management firm imploded in March 2021 after defaulting on its margin calls, it left Credit Suisse with losses totalling $5.1 billion, with the PRA stating that it resulted in “significant financial and reputational damage” for the bank, reports Fintech Futures.

The PRA says that the ensuing investigation found that the bank’s risk management oversight and corresponding practices “fell well below the regulatory standards required” and that it presented “an unsound risk culture within the business line that failed to balance considerations of risk against commercial reward appropriately”.

Sam Woods, deputy governor for prudential regulation and CEO of the PRA, says: “Credit Suisse’s failures to manage risks effectively were extremely serious, and created a major threat to the safety and soundness of the firm.

“The seriousness and widespread nature of those failures has led to today’s fine, which is the largest ever imposed by the PRA.”

Also Read: Analysts Make Painful Decision to Downgrade Big Banks

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Market News Today - UBS Will Now Pay Whopping $1.44bn for Defrauding Investors.
Market News Today – UBS Will Now Pay Whopping $1.44bn for Defrauding Investors.

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Credit Suisse is Now Getting Sued Over a Margin Call

Market News Daily - Credit Suisse is Now Getting Sued Over a Margin Call.
Market News Daily – Credit Suisse is Now Getting Sued Over a Margin Call.

Credit Suisse is now getting sued for $100 million over an allegedly incorrect margin call by South African hedge fund M1.

“The lawsuit against the Swiss bank adds to a pile of outstanding litigation and regulatory issues UBS has inherited from Credit Suisse after acquiring the bank in March in an emergency takeover,” says Financial Times.

Credit Suisse agreed to pay $388m on 24 July to settle claims with regulators relating to its relationship with hedge fund Archegos, which collapsed in March 2021, costing Credit Suisse $5.5bn.

The M1 claim also stems from its prime brokerage relationship with Credit Suisse, which refers to the services offered by investment banks to hedge funds.

M1 alleged in its claim, which was filed on 4 July in the Commercial Court in London, that Credit Suisse made an incorrect margin call which triggered the sale of stock that the hedge fund had pledged as collateral.

The hedge fund is claiming approximately $108m to replace shares sold by Credit Suisse following the margin call made in 2020, which it said the bank had wrongly calculated and was not in fact due.

A margin call is typically issued by a broker to an investor when the value of shares they have borrowed has fallen.

The investor is typically asked to deposit additional funds or sell shares to raise the percentage of their own money in the account above a certain minimal threshold, called the maintenance margin.

This is an open case and developing story.

The fall of Credit Suisse has sent shock waves throughout the entire financial industry affecting now just investors, but also its workforce.

Also Read: Credit Suisse Warns Investors of Naked Short Covering

Credit Suisse Workforce Gets Laid Off

Market News Daily - Credit Suisse is Now Getting Sued Over a Margin Call.
Market News Daily – Credit Suisse is Now Getting Sued Over a Margin Call.

UBS (NYSE:UBS) CEO warned of a new wave of banking layoffs which have been taking place since June.

Chief Executive Sergio Ermotti warned of painful decisions about job cuts following the takeover of Credit Suisse, which he said he hoped would be formalized later that month, per Reuters.

“We won’t be able to create, short term, job opportunities for everybody. Synergies is part of the story,” Ermotti said at an event organized by the Asset Management Association Switzerland in Bern.

“We need to take a serious look at the cost base of the standalone and combined organizations and create a sustainable outcome,” he added.

“It will be painful.”

Sources warned 10,000 jobs would have to be cut if the two banks combined; we’re now beginning to see the aftermath today.

“When the dust settles down …the best thing for our clients and shareholders and our people is to have the best people in the jobs,” said the UBS CEO.

Swiss newspaper Blick reported in June that each day around 150 people worldwide were resigning from Credit Suisse while one of the two people said they saw about 200 resignations a week.

Credit Suisse bankers, worried about their future are seeking safer employment at competitors, one person said.

People familiar with the matter declined to be named because they are not authorized to speak publicly, per Reuters.

Also Read: Credit Suisse Chairman Blames Collapse on Retail Investors

Credit Suisse Also Fined $388m Over Archegos Collapse

Credit Suisse Archegos
Market News Daily – Credit Suisse Archegos Fine.

The Swiss bank continues to get hammered as all hell falls upon its compounded scandals and failings.

Financial Times reports Credit Suisse has been fined $388mn by US and British regulators for “significant failures in risk management and governance” related to the collapse of Archegos Capital, which caused a $5.5bn trading loss and helped bring about the demise of the Swiss lender.

The US Federal Reserve imposed a $269mn penalty on the bank for “unsafe and unsound counterparty credit risk management practices”, while the UK Prudential Regulation Authority levied a record £87mn fine, according to a series of co-ordinated statements on Monday.

Swiss supervisor Finma said that Credit Suisse had “seriously and systematically violated financial market law” and that it was ordering corrective measures on its new parent UBS, which rescued its rival in a government-brokered takeover in March according the latest report.

Finma added that it has opened enforcement proceedings against a former employee, but does not have authority to fine financial institutions.

“Credit Suisse’s failures to manage risks effectively were extremely serious, and created a major threat to the safety and soundness of the firm,” said Sam Woods, head of the UK’s PRA.

“The seriousness and widespread nature of those failures has led to today’s fine, which is the largest ever imposed by the PRA.”

Credit Suisse took the biggest trading hit in its 167-year history when Archegos failed in March 2021, with the Swiss bank accounting for more than half of the total $10bn lost by international banks that offered the family office prime broking services.

UBS suffered a $861mn loss.

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Market News Today - Credit Suisse is Now Getting Sued Over a Margin Call.
Market News Today – Credit Suisse is Now Getting Sued Over a Margin Call.

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Bankers at Credit Suisse Quickly Throw in The Towel

Market News Daily - Bankers at Credit Suisse Quickly Throw in The Towel.
Market News Daily – Bankers at Credit Suisse Quickly Throw in The Towel.

Bankers at Credit Suisse (NYSE:CS) are quickly throwing in the towel as hundreds of resignations hit the distressed bank.

Swiss newspaper Blick reported earlier on Wednesday that each day around 150 people worldwide were resigning from Credit Suisse while one of the two people said they saw about 200 resignations a week.

Credit Suisse bankers, worried about their future are seeking safer employment at competitors, one person said.

People familiar with the matter declined to be named because they are not authorized to speak publicly, per Reuters.

UBS (NYSE:UBS) agreed on March 19 to take over its smaller Swiss rival as part of a rescue arranged by the Swiss authorities after a bout of market turmoil brought the struggling lender to the brink of collapse.

Credit Suisse said in April that the bank’s “employee attrition has been higher over the last year,” and that it had just over 48,000 full-time employees at the end of the first quarter and reported 50,480 full-time staff at the end of 2022.

UBS management has also said it would set a “very high bar” when deciding whether to retain any of Credit Suisse’s investment banking staff.

Similarly, about 1,000 First Republic (OTCMKTS:FRCB) employees have lost their job across all of First Republic’s businesses after the JPMorgan takeover.

UBS has said it plans to wind down Credit Suisse’s investment bank, which employs about 17,000 staff, and the Swiss state has pledged 9 billion Swiss franc in guarantees to cover potential losses from the operation.

No day passes without receiving a goodbye email from someone across the bank, one of the two people said.

At the investment bank, calls are often unanswered, he added.

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10,000 People Will Lose Their Banking Job

Market News Daily - Bankers at Credit Suisse Quickly Throw in The Towel.
Market News Daily – Bankers at Credit Suisse Quickly Throw in The Towel.

During the merge of UBS and Credit Suisse sources cautioned that “the talks to resolve the crisis of confidence in Credit Suisse are encountering significant obstacles, and 10,000 jobs may have to be cut” if the two banks combine.

The merged bank will employ 120,000 worldwide, although UBS has already said it will be cutting jobs to reduce costs, per Reuters.

Credit Suisse clients began withdrawing billions of dollars during the first quarter of the year.

In November of 2022, the bank had warned investors in a 6-K filing of potential losses due to naked short covering which has many retail investors speculating the nature of the markets.

Berkshire Hathaway’s Warren Buffett has held discussions with senior Biden administration officials about the banking crisis, a source told Reuters during the time of the merge.

All parties declined to comment on the banking situation.

This is the latest development in the UBS and Credit Suisse merge, but various banks today are laying off staff.

The banking crisis is happening globally with reports of banks such as JPMorgan and Captial One now freezing customer bank accounts.

Read: New Study Shows Nearly 190 Banks on Verge of Collapsing

US Banks Are Now Cutting 3,000 Roles Globally

Bank Layoff News and Updates 2023.
Bank Layoff News and Updates 2023.

US banks are now cutting more than 3,000 roles globally in the latest spree.

The US bank’s latest job cuts will hit 3,000 roles globally across most of its key divisions, as it embarks on its second round of redundancies within the space of six months, says FinancialNews London.

Morgan Stanely (NYSE:MS) recently cut around 70 dealmakers in Europe; the latest round of layoffs to hit the Wall Street bank this week.

Managing directors within its investment banking and global capital markets teams in Europe, the Middle East and Africa were informed of job cut decision earlier this week on Monday according to people familiar with the matter.

At the senior level, approximately 10 managing director dealmakers were cut in the region, the people added.

In January, Morgan Stanley’s rival Goldman Sachs laid off more than 3,000 employees and cut executive salaries.

Reuters reported on Friday that JPMorgan (NYSE:JPM) was cutting about 500 employees this week across its various departments, according to a person familiar with the situation who asked not to be identified discussing personnel matters.

The layoffs will affect employees across the bank’s main businesses — consumer, commercial banking, asset and wealth management — as well as technology and operations, the source said.

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Market News Today – Bankers at Credit Suisse Quickly Throw in The Towel.

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