Credit Suisse Sells Global Trust Business Amid Overhaul and Scandals
Background
Credit Suisse Group (CSGN.S) has announced the sale of its global trust business, an offshore arm for wealthy clients, as part of its efforts to overhaul its business following a series of scandals.
Context
The sale was announced as the Swiss bank defended itself against a billion-dollar-plus damages claim involving its trust arm in Singapore. Credit Suisse has dubbed 2022 a “transition” year with a change of guard, restructuring to curtail risk-taking, while it faces speculation it could be bought or broken up.
New Leadership
Ulrich Koerner, 59, a restructuring expert, succeeded Thomas Gottstein as CEO in August after a tumultuous two years punctuated by huge losses, a rare court conviction for the bank in Switzerland and a 40% plunge in its shares.
Scandals and Lawsuits
This week, Georgia’s former prime minister Bidzina Ivanishvili alleged in a Singapore court action that a trust unit of Credit Suisse had failed to take steps to prevent him from losing $1.27 billion. Ivanishvili has accused Credit Suisse Trust in Singapore of failing to safeguard his investments and “take the appropriate steps” to prevent losses linked to fraud committed by its former Geneva-based banker Patrice Lescaudron.
Bank’s Response
The trust unit said the size of his claim was “extreme”, asking the court to dismiss it. Lescaudron was convicted by a Swiss court in 2018 of forging the signatures of former clients, including Ivanishvili, over an eight-year period. Lescaudron subsequently took his own life.
Credit Suisse will sell the bulk of its trust business in Guernsey, Singapore, and the Bahamas to the Bank of N.T. Butterfield & Son Limited (NTB.N), while Gasser Partner Trust will take over the Liechtenstein business. Some entities will remain with Credit Suisse for a small number of clients. The bank declined further comment.
Credit Suisse’s decision to sell its global trust business is part of its efforts to restructure and move away from risk-taking activities. The sale is expected to generate significant revenue for the bank, which is facing financial challenges and regulatory scrutiny.
Q: Why is Credit Suisse selling its global trust business?
A: Credit Suisse is selling its global trust business as part of its efforts to restructure and move away from risk-taking activities.
Q: What is the size of the damages claim made by Bidzina Ivanishvili?
A: The size of the damages claim made by Bidzina Ivanishvili is $1.27 billion.
Q: What is the background of the scandal involving Patrice Lescaudron?
A: Patrice Lescaudron was convicted by a Swiss court in 2018 of forging the signatures of former clients, including Ivanishvili, over an eight-year period. Lescaudron subsequently took his own life.
Q: What is the fate of the remaining entities with Credit Suisse?
A: Some entities will remain with Credit Suisse for a small number of clients. The bank declined further comment.