Reviewing the Conradian tale of horror and woe that has been Credit Suisse over the past couple of years, new Chairman Axel Lehmann—new because of one of those chapters, the COVID-rulebreaking-foreshortened tenure of his predecessor—has come to the conclusion that maybe its troubles run deeper than a few bad apples, like the banker ripping off the Georgian prime minister or the chief operating officer covertly running a global espionage agency. “It has become clear that the challenges of the past were not solely attributable to the isolated poor decisions or to individual decision maker,” he, presumably painfully, acknowledged.
To be sure, Credit Suisse has come dangerously close to this kind of self-knowledge amidst the nightmares, implicitly acknowledged in the hire of a counterparty market risk chief and somewhat more explicitly in its own internal review which found no one at the helm of the ship. And, with the benefit of hindsight and also not being there any more, Lehmann’s not alone in his painful moment of reckoning.
“We had historically weak compliance combined with high risk-taking businesses,” says a former executive who worked in the bank’s risk department. “The structure also made it very difficult to see total global risk — it was like playing hide and seek….”
Credit Suisse commissioned a similar report into its failings over the Greensill affair, which was conducted by Deloitte and Swiss law firm Walder Wyss…. [A] person who has seen the report says its findings are broadly similar to those uncovered by the Archegos report: commercially minded executives overriding concerns raised by weak risk managers. “We made mistakes, but without the front office caring about managing risk and compliance, something was bound to happen,” the former risk manager says.
Speaking of things that were bound to happen, when you lose investors about $6 billion in a spectacular hedge fund collapse, it’s probably eventually going to cost you about $6 billion. Which it now has for Allianz.
Allianz SE is setting aside an additional 1.9 billion euros ($2 billion) to resolve lawsuits and regulatory probes tied to the collapse of a group of its hedge funds two years ago…. The charges bring the total cost from the implosion of the Florida-based Structured Alpha funds to 5.6 billion euros, after the insurer announced a 3.7 billion-euro hit earlier in a first round of settlements with investors.
For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.