How years of turbulence came to a head

Credit Suisse received a liquidity lifeline from the Swiss National Bank this week after its share price plunged to an all-time low, but the embattled lender’s path to the brink has been a long and tumultuous one.

The announcement that Credit Suisse would borrow up to 50 billion Swiss francs ($54 billion) from the central bank came after consecutive sessions of steep drops in its share price. It made Credit Suisse the first major bank to receive such an intervention since the 2008 Global Financial Crisis.

The bank’s shares ended Wednesday at 1.697 Swiss francs — down almost 98% from the stock’s all-time high in April 2007, while credit default swaps, which insure bondholders against a company defaulting, soared to new record highs this week.

It comes after years of investment banking underperformance and a litany of scandals and risk management failures.

Scandals

Credit Suisse is currently undergoing a massive strategic overhaul in a bid to address these chronic issues. Current CEO and Credit Suisse veteran Ulrich Koerner took over from Thomas Gottstein in July, as poor investment bank performance and mounting litigation provisions continued to hammer earnings.

Gottstein took the reins in early 2020 following the resignation of predecessor Tidjane Thiam in the wake of a bizarre spying scandal, in which UBS-bound former wealth management boss Iqbal Khan was tailed by private contractors allegedly at the direction of former COO Pierre-Olivier Bouee. The saga also saw the suicide of a private investigator and the resignations of a slew of executives.

The former head of Credit Suisse’s flagship domestic bank widely perceived as a steady hand, Gottstein sought to lay to rest an era plagued by scandal. That mission was short-lived.

In early 2021, he found himself dealing with the fallout from two huge crises. The bank’s exposure to the collapses of U.S. family hedge fund Archegos Capital and British supply chain finance firm Greensill Capital saddled it with massive litigation and reimbursement costs.

These oversight failures resulted in a massive shakeup of Credit Suisse’s investment banking, risk and compliance and asset management divisions.

In April 2021, former Lloyds Banking Group CEO Antonio Horta-Osorio was brought in to clean up the bank’s culture after the string of scandals, announcing a new strategy in November.

But in January…