What is happening at Credit Suisse — the Swiss bank that had at least 1400 Pakistani accounts

Credit Suisse has been plagued by a series of scandals, leading to a significant decline in its shares. Pakistani names have regularly been associated with the bank’s scandals

LAHORE: A year after it faced a massive data leak, Credit Suisse, one of the world’s largest private banks, is facing a sharp fall in the price of its shares. And while the Swiss National Bank has agreed to cushion the bank’s fall with a $50 billion loan aimed at avoiding default, the bank continues to be in the line of fire over questionable practices. 

The current crisis comes as the result of a string of scandals over many years, top management changes, multi-billion dollar losses and an uninspiring strategy can be blamed for the mess that the 167-year-old Swiss lender now finds itself in.

The bank’s troubles began when a whistleblower gave an insight into the bank’s dirty businesses.It revealed the hidden fortunes of its wealthy clients in 128 countries, ranging from business owners to politicians and those probed, and sometimes convicted, in connection with various criminal activities.

Many Pakistani names were also found in the leaked data. To be more precise, around 1,400 individuals in Pakistan were linked with around 600 accounts opened in Credit Suisse.  These included individuals who were under the radar of the National Accountability Bureau (NAB). 

The list also included the former head of the Pakistani intelligence agency, General Akhtar Abdur Rahman Khan. As reported by The New York Times, Khan “helped funnel billions of dollars in cash and other aid from the United States and other countries to the mujahideen in Afghanistan to support their fight against the Soviet Union.” Credit Suisse denied the  allegations soon afterwards.

Similarly, several politically exposed persons opened their accounts at a time when they were public office holders and they didn’t mention it in their assets declaration submitted to the Election Commission of Pakistan. One such individual received a substantial amount of funds in Credit Suisse at the prime of his political career. One of the richest accounts held at the bank was of a Pakistani politician.

Average maximum balance in accounts held by Pakistanis was 4.42 million Swiss francs (Rs 841 million) compared with the overall average of the leaked data which stood at 7.5 million Swiss francs (Rs1.42 billion).

Decades of dirty money 

When a bank collapses, it borrows money from other solvent banks or governments to pay back its depositors. That’s essentially what Credit Suisse is headed towards as it takes a loan from Switzerland’s central bank. 

Credit Suisse has been plagued by a series of scandals, leading to a significant decline in its shares and a perception that it is the weakest link in the Swiss banking industry. 

The bank’s woes include the collapse of Greensill, costing the bank around $10 billion and leading to fines and remedial measures from Swiss financial regulator Finma. Credit Suisse also lost more than $5 billion from the implosion of US hedge fund Archegos, and was fined $475 million for involvement in a bribery scandal in Mozambique.

In addition, former Chairman Antonio Horta-Osorio resigned after violating Switzerland’s Covid quarantine rules, and a media investigation alleged that the bank held billions of dollars in dirty money for decades. 

Credit Suisse was also fined in a money laundering case linked to a Bulgarian cocaine network and has settled old disputes in the US and France. The bank was forced to postpone its annual report and acknowledged “material weaknesses” in its internal controls. Market panic ensued after comments from Credit Suisse’s main shareholder that it would not invest more money in the bank.

Previously a leak from Credit Suisse had exposed the hidden wealth of major clients, including hundreds of Pakistanis, according to media reports. The leaked data revealed that the bank catered to criminals, dictators, intelligence officials, and political actors with outsized wealth. 

Compliance experts said many of these customers should not have been allowed to bank at Credit Suisse. The leak identified $8 billion in potentially problematic assets. 1,400 Pakistani citizens were linked to around 600 Credit Suisse accounts. The head of Pakistan’s intelligence agency was listed as holding amounts worth millions of dollars in Credit Suisse accounts.


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