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90-553: Credit Suisse Group AG ( French pronunciation: [kʁe.di sɥis] , lit.   ' Swiss Credit ' ) is a global investment bank and financial services firm founded and based in Switzerland as a standalone firm but now a subsidiary of UBS . According to UBS, eventually Credit Suisse will be fully integrated into UBS but while the integration is not complete both banks are operating separately. Headquartered in Zürich , as

180-640: A 10 per cent stake, Qatar Investment Authority (QIA) boosted its stake in the Credit Suisse Group to 6.87 per cent and Harris Associates reported a holding of below 3 per cent. Harris Associates reported having exited all its Credit Suisse positions by March 2023. Credit Suisse stock (CS) in the NYSE fell from $ 2.50 to $ 1.88 a share on 15 March 2023. On 19 March 2023, fellow Swiss bank group UBS agreed to buy Credit Suisse for more than US$ 3   billion. The purchase of Credit Suisse by UBS has reportedly averted

270-829: A 44 percent 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, 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

360-555: A CHF 2.24bn rights issue and a CHF 1.80bn private placing. On 9 February 2023, the bank reported an annual loss of CHF 7.3 bn, the biggest loss since the 2007–2008 financial crisis . On 14 March of that same year, Credit Suisse published its annual report for 2022 saying it had identified “material weaknesses” in controls over financial reporting. On 15 March 2023, Credit Suisse' share price dropped nearly 25   percent after Saudi National Bank, its largest investor, said it could not provide more financial assistance. The market price of

450-639: A commercial or retail bank. From the passage of Glass–Steagall Act in 1933 until its repeal in 1999 by the Gramm–Leach–Bliley Act , the United States maintained a separation between investment banking and commercial banks. Other industrialized countries, including G7 countries, have historically not maintained such a separation. As part of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 ( Dodd–Frank Act of 2010 ),

540-473: 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 2007–2008 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

630-652: 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 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

720-408: A greater crisis, according to SNB. Estate planning Insurance Tax planning Philanthropy Investment products Foreign exchange Lending Investment banking Unlike commercial banks and retail banks , investment banks do not take deposits . The revenue model of an investment bank comes mostly from the collection of fees for advising on a transaction, contrary to

810-551: A hub of European M&A activity, often facilitating the most capital movement and corporate restructuring in the area. Meanwhile, Asian cities are receiving a growing share of M&A activity. According to estimates published by the International Financial Services London , for the decade prior to the financial crisis in 2008, M&A was a primary source of investment banking revenue, often accounting for 40% of such revenue, but dropped during and after

900-720: A key part of capital market transactions, involving debt structuring , exit financing, loan amendment, project finance , leveraged buy-outs , and sometimes portfolio hedging. The "Market Risk Team" provides services to investors via derivative solutions, portfolio management , portfolio consulting, and risk advisory. Well-known "Risk Groups" are at JPMorgan Chase , Morgan Stanley , Goldman Sachs and Barclays . J.P. Morgan IB Risk works with investment banking to execute transactions and advise investors, although its Finance & Operation risk groups focus on middle office functions involving internal, non-revenue generating, operational risk controls. The credit default swap , for instance,

990-456: A key service in terms of advisory and strategy. While the research division may or may not generate revenue (based on the specific compliance policies at different banks), its resources are used to assist traders in trading, the sales force in suggesting ideas to customers, and investment bankers by covering their clients. Research also serves outside clients with investment advice (such as institutional investors and high-net-worth individuals) in

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1080-544: A larger crackdown in Brazil. Four Credit Suisse bankers were accused of fraud by the US Justice Department in 2011 for helping wealthy Americans avoid taxes. In 2012, German authorities found that citizens were using insurance policies of a Bermuda-based Credit Suisse subsidiary to earn tax-free interest. In November 2012, Credit Suisse's asset management division was merged with the private banking arm. In September 2012,

1170-481: A number of economic analysts, particularly the resulting lack of banking competition in Switzerland's economy. The take-over by UBS had limited the choice of lenders, particularly for smaller and medium sized companies. Credit Suisse's international reach had affected the employment situation in Europe as well as other regions. The Swiss economy as such also relies on a number of heavily capitalised state banks that have been

1260-1046: A percentage of revenue. As far back as 1960, 70% of Merrill Lynch 's revenue was derived from transaction commissions while "traditional investment banking" services accounted for 5%. However, Merrill Lynch was a relatively "retail-focused" firm with a large brokerage network. Investment banking is split into front office , middle office , and back office activities. While large service investment banks offer all lines of business, both "sell side" and "buy side", smaller sell-side advisory firms such as boutique investment banks and small broker-dealers focus on niche segments within investment banking and sales/trading/research, respectively. For example, Evercore (NYSE:EVR) acquired ISI International Strategy & Investment (ISI) in 2014 to expand their revenue into research-driven equity sales and trading. Investment banks offer services to both corporations issuing securities and investors buying securities. For corporations, investment bankers offer information on when and how to place their securities on

1350-460: A result of selling complex derivatives contracts to local municipalities in Europe and the US. Strategists advise external as well as internal clients on the strategies that can be adopted in various markets. Ranging from derivatives to specific industries, strategists place companies and industries in a quantitative framework with full consideration of the macroeconomic scene. This strategy often affects

1440-593: A significant investment banking division (IBD) include JPMorgan Chase , Bank of America , Citigroup , Deutsche Bank , UBS (Acquired Credit Suisse ), and Barclays . After the financial crisis of 2007–08 and the subsequent passage of the Dodd-Frank Act of 2010 , regulations have limited certain investment banking operations, notably with the Volcker Rule's restrictions on proprietary trading. The traditional service of underwriting security issues has declined as

1530-421: A significant lender to those smaller enterprises, particularly after the demise of CS. On 27 June 2023, UBS announced its intention to cut more than half of Credit Suisse's workforce. In July 2024, Credit Suisse (Schweiz) ceased to exist as a separate legal entity after fully being integrated into UBS Switzerland. Credit Suisse's leadership history unfolds through visionary leaders like Alfred Escher, who founded

1620-437: A standalone firm it maintained offices in all major financial centers 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

1710-495: 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

1800-559: A third from 2009, as companies pursued less deals and traded less. Differences in total revenue are likely due to different ways of classifying investment banking revenue, such as subtracting proprietary trading revenue. In terms of total revenue, SEC filings of the major independent investment banks in the United States show that investment banking (defined as M&A advisory services and security underwriting) made up only about 15–20% of total revenue for these banks from 1996 to 2006, with

1890-1314: A trader after he buys or sells a product to a client and does not hedge his total exposure. Here, and in general, banks seek to maximize profitability for a given amount of risk on their balance sheet. Note here that the FRTB framework has underscored the distinction between the " Trading book " and the " Banking book " - i.e. assets intended for active trading, as opposed to assets expected to be held to maturity - and market risk capital requirements will differ accordingly. The necessity for numerical ability in sales and trading has created jobs for physics , computer science , mathematics , and engineering PhDs who act as "front office" quantitative analysts . The securities research division reviews companies and writes reports about their prospects, often with "buy", "hold", or "sell" ratings. Investment banks typically have sell-side analysts which cover various industries. Their sponsored funds or proprietary trading offices will also have buy-side research. Research also covers credit risk , fixed income , macroeconomics , and quantitative analysis , all of which are used internally and externally to advise clients; alongside "Equity", these may be separate "groups". The research group(s) typically provide

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1980-498: Is a commodity business, but structuring and trading derivatives have higher margins because each over-the-counter contract has to be uniquely structured and could involve complex pay-off and risk profiles. One growth area is private investment in public equity (PIPEs, otherwise known as Regulation D or Regulation S). Such transactions are privately negotiated between companies and accredited investors . Banks also earned revenue by securitizing debt, particularly mortgage debt prior to

2070-669: Is a famous credit risk hedging solution for clients invented by J.P. Morgan's Blythe Masters during the 1990s. The Loan Risk Solutions group within Barclays' investment banking division and Risk Management and Financing group housed in Goldman Sach's securities division are client-driven franchises. Risk management groups such as credit risk, operational risk, internal risk control, and legal risk are restrained to internal business functions — including firm balance-sheet risk analysis and assigning

2160-578: Is buying and selling products. Sales is the term for the investment bank's sales force, whose primary job is to call on institutional and high-net-worth investors to suggest trading ideas (on a caveat emptor basis) and take orders. Sales desks then communicate their clients' orders to the appropriate bank department, which can price and execute trades, or structure new products that fit a specific need. Sales make deals tailored to their corporate customers' needs, that is, their terms are often specific. Focusing on their customer relationship, they may deal on

2250-486: Is not a comprehensive summary of all middle-office functions within an investment bank, as specific desks within front and back offices may participate in internal functions. The back office data-checks trades that have been conducted, ensuring that they are not wrong, and transacts the required transfers. Many banks have outsourced operations. It is, however, a critical part of the bank. Every major investment bank has considerable amounts of in-house software , created by

2340-517: Is organised as a joint-stock company registered in Zürich that operates as a holding company. It owns the Credit Suisse bank and other interests in the financial services business. Credit Suisse is governed by a board of directors, its shareholders, and independent auditors. The Board of Directors organise the annual General Meeting of Shareholders while investors with large stakes in the company determine

2430-408: Is raised for the corporation include those listed aside. This work may involve, i.a., subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. A pitch book , also called a confidential information memorandum (CIM), is a document that highlights the relevant financial information, past transaction experience, and background of the deal team to market

2520-638: Is the control function for the Markets' business and conducts review of sales and trading activities utilizing the VaR model . Other Middle office "Risk Groups" include country risk, operational risk, and counterparty risks which may or may not exist on a bank to bank basis. Front office risk teams, on the other hand, engage in revenue-generating activities involving debt structuring, restructuring, syndicated loans , and securitization for clients such as corporates, governments, and hedge funds. Here "Credit Risk Solutions", are

2610-582: The Baur en Ville hotel in Zürich for sale. However, this intervention did not stop investors and customers from pulling their money out of Credit Suisse, with outflows topping 10 billion Swiss francs during the week, and almost $ 69 billion (approximately 61 billion Swiss francs) in withdrawals during the first calendar quarter. The situation was so compromised that the SNB and the Swiss government started discussions to fast-track

2700-573: 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

2790-593: The Securities Association of China is a self-regulatory organization whose members are largely investment banks. Global investment banking revenue increased for the fifth year running in 2007, to a record US$ 84 billion, which was up 22% on the previous year and more than double the level in 2003. Subsequent to their exposure to United States sub-prime securities investments, many investment banks have experienced losses. As of late 2012, global revenues for investment banks were estimated at $ 240 billion, down about

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2880-719: The Troubled Asset Relief Program (TARP). Surviving U.S. investment banks such as Goldman Sachs and Morgan Stanley converted to traditional bank holding companies to accept TARP relief. Similar situations have occurred across the globe with countries rescuing their banking industry. Initially, banks received part of a $ 700 billion TARP intended to stabilize the economy and thaw the frozen credit markets. Eventually, taxpayer assistance to banks reached nearly $ 13 trillion—most without much scrutiny— lending did not increase, and credit markets remained frozen. Gotthard railway Too Many Requests If you report this error to

2970-471: The Volcker Rule asserts some institutional separation of investment banking services from commercial banking. All investment banking activity is classed as either "sell side" or "buy side". The " sell side " involves trading securities for cash or for other securities (e.g. facilitating transactions, market-making), or the promotion of securities (e.g. underwriting, research, etc.). The " buy side " involves

3060-641: The 21st century, the SEC filings of the major independent investment banks such as Goldman Sachs and Morgan Stanley reflect three product segments: In the United States, commercial banking and investment banking were separated by the Glass–Steagall Act , which was repealed in 1999. The repeal led to more " universal banks " offering an even greater range of services. Many large commercial banks have therefore developed investment banking divisions through acquisitions and hiring. Notable full-service investment banks with

3150-660: 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 bonds 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

3240-857: The National Investment Banking Association (NIBA). In Europe, the European Forum of Securities Associations was formed in 2007 by various European trade associations. Several European trade associations (principally the London Investment Banking Association and the European SIFMA affiliate) combined in November 2009 to form the Association for Financial Markets in Europe (AFME). In the securities industry in China ,

3330-714: 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. 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

3420-731: The Swiss government gave banks like Credit Suisse permission to provide information to the US Justice Department for tax evasion probes. In February 2014, it agreed to pay a fine of $ 197 million after one of its businesses served 8,500 US clients without registering its activities, leading to suspicion as to whether it was helping Americans evade taxes. It was one of 14 Swiss banks under investigation. Separately, in 2013, German authorities began to probe Credit Suisse, its private bank subsidiary Clariden Leu , and its regional subsidiary Neue Aargauer Bank for helping German citizens evade taxes. In 2012,

3510-564: The United States since Drexel Burnham Lambert in 1989 and the largest to do so since the Bankers Trust in 1999. "Credit Suisse conspired to help US citizens hide assets in offshore accounts in order to evade paying taxes. When a bank engages in misconduct this brazen, it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as has happened here," Attorney General Eric H. Holder said at

3600-618: The agenda. Shareholders elect auditors for one-year terms, approve the annual report and other financial statements, and have other powers granted by law. Shareholders elect members of the board of directors to serve a three-year term based on candidates nominated by the Chairman's and Governance Committee and the Board of Directors meet six times a year to vote on company resolutions. The Board sets Credit Suisse's business strategies and approves its compensation (remuneration) principles based on guidance from

3690-511: 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. According to The Wall Street Journal in 2008, "Credit Suisse survived

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3780-424: The bank eventually entered into a €150 million settlement with the government. In March 2014, Credit Suisse denied claims it had been drawn into a Swiss competition probe investigating potential collusion to manipulate foreign exchange rates ( Forex scandal ) by various Swiss and foreign banks. In May 2014, Credit Suisse pleaded guilty to conspiring to aid tax evasion. It was the most prominent bank to plead guilty in

3870-837: The bank in 1856. Hermann Heller's international focus during 1909–1937 and August Rust's diversification from 1942–1967 laid crucial foundations. Edwin Stopper's strategies in 1979–1990 brought challenges amid expansion into global markets. Lukas Muhlemann's cost-cutting efforts in 1993–2002 faced setbacks, and Oswald Grubel grappled with restructuring post–2008 crisis during 2003–2013. Tidjane Thiam's wealth management focus in 2015–2020 faced external challenges, leading to resignation. Tomas Gottstein, since 2020, tackles geopolitical tensions, emphasizing sustainability while navigating regulatory changes for investor confidence. Understanding Credit Suisse's leadership involves considering broader industry trends and key advisors beyond CEOs. Credit Suisse Group AG,

3960-407: The bank to a potential M&A client; if the pitch is successful, the bank arranges the deal for the client. Recent legal and regulatory developments in the U.S. will likely alter the makeup of the group of arrangers and financiers willing to arrange and provide financing for certain highly leveraged transactions. On behalf of the bank and its clients, a large investment bank's primary function

4050-440: The bank's ATL debt filed a lawsuit against Switzerland seeking compensation. According to financial analysts, economic sanctions imposed by Switzerland on Russian individuals and businesses had a significant impact on the demise of the bank. According to Bloomberg News , Credit Suisse held about $ 33 billion for Russian clients, 50% more than UBS . In late April 2023, the political and economic fall-out had been evaluated by

4140-473: The bank's acquisition by UBS . On 19 March 2023, UBS announced a deal had been reached to acquire Credit Suisse for US$ 3.25   billion (CHF 3 billion) in an all-stock deal. European regulators have criticized the moral hazard of the AT1 bondholders suffering in the loss of their capital rather than the shareholders of the bank. In June 2024, a group of Credit Suisse bondholders holding $ 82 million worth of

4230-689: The bank's collapse. UBS completed the acquisition in June 2023. 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

4320-444: The bank's profitability. See also Chinese wall § Finance . This area of the bank includes treasury management , internal controls (such as Risk), and internal corporate strategy. Corporate treasury is responsible for an investment bank's funding, capital structure management, and liquidity risk monitoring; it is (co)responsible for the bank's funds transfer pricing (FTP) framework. Internal control tracks and analyzes

4410-600: The bank's revenues was 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

4500-518: The bank's unsecured bonds set for maturity in 2027 dropped to a low of 33   percent of their par value on that day, down from being valued at 90   percent of their par value at the beginning of the month. Later in the same week, Credit Suisse sought to shore up their finances by taking a loan of 50 billion Swiss francs from the Swiss National Bank (SNB); the bank later proceeded to buy three billion Swiss francs of its own debt and to put

4590-413: The capital flows of the firm, the finance division is the principal adviser to senior management on essential areas such as controlling the firm's global risk exposure and the profitability and structure of the firm's various businesses via dedicated trading desk product control teams. In the United States and United Kingdom, a comptroller (or financial controller) is a senior position, often reporting to

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4680-512: The chief financial officer. Risk management involves analyzing the market and credit risk that an investment bank or its clients take onto their balance sheet during transactions or trades. Middle office "Credit Risk" focuses around capital markets activities, such as syndicated loans , bond issuance, restructuring , and leveraged finance. These are not considered "front office" as they tend not to be client-facing and rather 'control' banking functions from taking too much risk. "Market Risk"

4770-431: The collapse of several notable investment banks, such as the bankruptcy of Lehman Brothers (one of the largest investment banks in the world) and the hurried fire sale of Merrill Lynch and the much smaller Bear Stearns to much larger banks, which effectively rescued them from bankruptcy. The entire financial services industry, including numerous investment banks, was bailed out by government taxpayer funded loans through

4860-473: 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 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

4950-565: The compensation committee. It also has the authority to create committees that delegate specific management functions. Credit Suisse has the following operational divisions: Operations are divided into four regions: Switzerland, Europe, the Middle East, and Africa, the Americas, and the Asian Pacific. On 9 May 2023, Credit Suisse announced that it would continue its banking operations but under

5040-461: 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

5130-399: The credit crisis better than many competitors." Credit Suisse had $ 902 million in writedowns for subprime holdings and the same amount for leveraged loans, but it did not have to borrow from the government. Along with other banks, Credit Suisse was investigated and sued by US authorities in 2012 for bundling mortgage loans with securities, misrepresenting the risks of underlying mortgages during

5220-486: 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,

5310-904: 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

5400-446: The executive board of the bank. At this time, it was also announced that Eric M. Varvel was appointed president and CEO of Credit Suisse Holdings (USA). The collapse of Lehman Brothers caused a large loss in consumer and market participant trust and confidence in the banking industry. The loss in confidence is reflected in the large loss of share prices across the Swiss banking sector after 2008. In August 2019, Credit Suisse announced

5490-428: 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 CHF  1.3 trillion 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

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5580-399: The financial crisis. Equity underwriting revenue ranged from 30% to 38%, and fixed-income underwriting accounted for the remaining revenue. Revenues have been affected by the introduction of new products with higher margins ; however, these innovations are often copied quickly by competing banks, pushing down trading margins. For example, brokerages commissions for bond and equity trading

5670-495: The financial crisis. Investment banks have become concerned that lenders are securitizing in-house, driving the investment banks to pursue vertical integration by becoming lenders, which has been allowed in the United States since the repeal of the Glass–Steagall Act in 1999. According to The Wall Street Journal , in terms of total M&A advisory fees for the whole of 2020, the top ten investment banks were as listed in

5760-405: The formation of a new "direct banking" business unit under their Switzerland division (Swiss Universal Bank, SUB), focusing on digital retail products. The step is seen as a reaction to the emergence of FinTech competitors such as N26 or Revolut in Switzerland and shall help to better attract young clients. In July 2020, Thomas Gottstein , the new CEO of the company, announced restructuring; it

5850-489: The general public. It was also the first publicly traded company , being the first company to be publicly listed . Investment banking has changed over the years, beginning as a partnership firm focused on underwriting security issuance, i.e. initial public offerings (IPOs) and secondary market offerings , brokerage , and mergers and acquisitions, and evolving into a "full-service" range including securities research , proprietary trading , and investment management . In

5940-416: The hopes that these clients will execute suggested trade ideas through the sales and trading division of the bank, and thereby generate revenue for the firm. With MiFID II requiring sell-side research teams in banks to charge for research, the business model for research is increasingly becoming revenue-generating. External rankings of researchers are becoming increasingly important, and banks have started

6030-534: The hospice of UBS in order to fulfill its financial obligations towards existing clients as well as employees of both banks. CEO Ulrich Körner will join UBS's executive board. In August 2022, it was revealed that the largest shareholder of Credit Suisse was in fact American, namely Harris Associates , holding over 10% of the shares of the group. Harris Associates itself is owned by French bank Natixis . As of 25 January 2023, Saudi National Bank , an anchor investor, held

6120-401: The housing boom. Following the crisis, Credit Suisse cut more than one-trillion in assets and made plans to cut its investment banking arm 37 percent by 2014. It reduced emphasis on investment banking and focused on private banking and wealth management . In July 2011, Credit Suisse cut 2,000 jobs in response to a weaker than expected economic recovery and later merged its asset management with

6210-400: The majority of revenue (60+% in some years) brought in by "trading" which includes brokerage commissions and proprietary trading; the proprietary trading is estimated to provide a significant portion of this revenue. The United States generated 46% of global revenue in 2009, down from 56% in 1999. Europe (with Middle East and Africa ) generated about a third, while Asian countries generated

6300-473: 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. The increasing importance of sustainability and

6390-562: The open market, a highly regulated process by the SEC to ensure transparency is provided to investors. Therefore, investment bankers play a very important role in issuing new security offerings. Front office is generally described as a revenue -generating role. There are two main areas within front office: investment banking and markets. Corporate finance is the aspect of investment banks which involves helping customers raise funds in capital markets and giving advice on mergers and acquisitions (M&A); transactions in which capital

6480-421: The practice of selling derivatives that are often used by bank clients to hide losses. 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

6570-561: The private bank group to cut additional costs. We sell [bank] safety not bank secrecy . Being a safe haven in a world that is becoming increasingly dangerous and volatile is no bad place to be. A series of international investigations took place in the early 2000s regarding the use banking secrecy in Credit Suisse accounts for tax evasion. In 2008, the Brazilian government investigated 13 former and current Credit Suisse employees. The investigation led to arrests that year and in 2009 as part of

6660-477: The process of monetizing research publications, client interaction times, meetings with clients etc. There is a potential conflict of interest between the investment bank and its analysis, in that published analysis can impact the performance of a security (in the secondary markets or an initial public offering) or influence the relationship between the banker and its corporate clients, and vice versa regarding material non-public information (MNPI), thereby affecting

6750-478: The provision of advice to institutions that buy investment services. Private equity funds, mutual funds , life insurance companies, unit trusts , and hedge funds are the most common types of buy-side entities . An investment bank can also be split into private and public functions with a screen separating the two to prevent information from crossing. The private areas of the bank deal with private insider information that may not be publicly disclosed, while

6840-408: The public areas, such as stock analysis, deal with public information. An advisor who provides investment banking services in the United States must be a licensed broker-dealer and subject to U.S. Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) regulation. The Dutch East India Company was the first company to issue bonds and shares of stock to

6930-473: 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 percent of

7020-531: The related commitments and liabilities of international standards such as the UNGC, of which the bank is a member, lead to increasingly sophisticated and ambitious risk management over the years. Credit Suisse operates 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

7110-493: The remaining 21%. The industry is heavily concentrated in a small number of major financial centers, including New York City , City of London , Frankfurt , Hong Kong , Singapore , and Tokyo . The majority of the world's largest Bulge Bracket investment banks and their investment managers are headquartered in New York and are also important participants in other financial centers. The city of London has historically served as

7200-443: 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 percent per year despite the economic crisis. The firm bumped long-time rival UBS off

7290-701: The table below. Many of these firms belong either to the Bulge Bracket (upper tier), Middle Market (mid-level businesses), or are elite boutique investment banks (independent advisory investment banks). The above list is just a ranking of the advisory arm (M&A advisory, syndicated loans, equity capital markets, and debt capital markets) of each bank and does not include the generally much larger portion of revenues from sales & trading and asset management . Mergers and acquisitions and capital markets are also often covered by The Wall Street Journal and Bloomberg . The financial crisis of 2007–2008 led to

7380-614: The technology team, who are also responsible for technical support . Technology has changed considerably in the last few years as more sales and trading desks are using electronic processing. Some trades are initiated by complex algorithms for hedging purposes. Firms are responsible for compliance with local and foreign government regulations and internal regulations. The investment banking industry can be broken up into Bulge Bracket (upper tier), Middle Market (mid-level businesses), and boutique market (specialized businesses) categories. There are various trade associations throughout

7470-477: The time. Holder also said "This case shows that no financial institution, no matter its size or global reach, is above the law." Credit Suisse shares rose 1% on the day the $ 2.6 billion penalty was announced. In March 2015, it was announced that Tidjane Thiam , the CEO of Prudential would leave to become the next CEO of Credit Suisse. In September 2016, Brian Chin was appointed Chief Executive of Global Markets and joined

7560-460: The trading cap — that are independent of client needs, even though these groups may be responsible for deal approval that directly affects capital market activities. Similarly, the Internal corporate strategy group, tackling firm management and profit strategy, unlike corporate strategy groups that advise clients, is non-revenue regenerating yet a key functional role within investment banks. This list

7650-408: The way the firm will operate in the market, the direction it would like to take in terms of its proprietary and flow positions, the suggestions salespersons give to clients, as well as the way structurers create new products. Banks also undertake risk through proprietary trading , performed by a special set of traders who do not interface with clients and through "principal risk"—risk undertaken by

7740-602: The whole range of asset types. (In distinction, trades negotiated by market-makers usually bear standard terms; in market making , traders will buy and sell financial products with the goal of making money on each trade. See under trading desk .) Structuring has been a relatively recent activity as derivatives have come into play, with highly technical and numerate employees working on creating complex financial products which typically offer much greater margins and returns than underlying cash securities, so-called "yield enhancement". In 2010, investment banks came under pressure as

7830-661: The world which represent the industry in lobbying , facilitate industry standards, and publish statistics. The International Council of Securities Associations (ICSA) is a global group of trade associations. In the United States, the Securities Industry and Financial Markets Association (SIFMA) is likely the most significant; however, several of the large investment banks are members of the American Bankers Association Securities Association (ABASA), while small investment banks are members of

7920-457: 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 percent 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",

8010-574: Was influenced as a result of the trading surge in Q2 of 2020, amid the COVID-19 pandemic . The planned restructuring is set "to reduce costs and improve efficiencies" and features some reverts of alterations brought by the previous CEO, Thiam. According to Gottstein, "These initiatives should also help to provide resilience in uncertain markets and deliver further upside when more positive economic conditions prevail." In November of 2022, Credit Suisse announced that it

8100-503: Was selling the majority of its Securitized Products Group to Apollo Asset Management. Credit Suisse cited a reduction in RWA as the primary factor driving the sale. The deal was expected to close in the first half of 2023. [2] The spin-off was branded Atlas SP and the deal ultimately finalized in March of 2024. [3] In December of 2022, Credit Suisse completed a CHF 4.00bn capital increase by the way of

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