After the big bank crash: five members of the CS group management in Finma’s sights

60 professional bans imposed

The enforcement process is the sharpest weapon in the supervisory arsenal. In extreme cases, persons may be banned from practicing their profession after such a procedure. According to Finma, the supervisory authority has imposed professional bans on approximately sixty people since 2009, two-thirds of whom are senior managers.

According to the Finma report, five of the eight cases against those responsible for CS are still pending. Three have been completed; these are in the context of the so-called ‘Spygate affair’. According to Finma, two of these investigations were stopped because those involved had committed themselves never to work at an institution under Finma’s supervision again.

The five ongoing enforcement actions relate, on the one hand, to the Greensill supply chain funds scandal; There are four proceedings pending here. Finma is still pursuing a case against a CS manager in connection with the loss of five billion from transactions with the family office Archegos. This allocation of cases follows from Finma’s previous communication.

But more exciting than the case assignment is the question: who has had or is facing an enforcement order? Finma remains steadfastly silent on this matter. Some conclusions can be drawn from conversations with active and former CS managers, but there is no complete clarity on the question.

According to information from Handelszeitung, Finma has opened proceedings against ex-CS Thomas Gottstein, which was first reported by SonntagsBlick. A spokesperson for the former CS boss does not want to respond to the information. According to the sources, the proceedings mainly concern Gottstein’s responsibility for Credit Suisse’s mistakes in the Greensill case.

The Greensill scandal exploded in March 2021. At that time, CS had to close the supply chain funds. For these products, it was not the bank, but the boutique Greensill Capital that selected the securities backed by supply chain loans in which the fund invested and that caused problems. To this day, customers are still waiting for money. According to Finma, CS had “seriously” breached its supervisory obligations in the areas of risk management and operational organization in the Greensill case.

According to people with knowledge of the events, Gottstein is very angry that Finma has not initiated proceedings against Iqbal Kahn in the case. The cases with the scandal funds were part of the asset management, which was Khan’s responsibility at the time. According to insiders, the CS even had every recording of Khan’s previous town hall meetings listened to on the CS to find clues as to whether Khan had actually pushed the Greensill funds internally.

The bigger problem for Gottstein is the long duration of the Finma investigation. Because as long as he has a supervisory procedure under his belt, he is de facto subject to a professional ban in the financial sector. The ex-CS boss definitely wants to take on his responsibility again – and not just play golf.

Another former member of CS management that Finma has in its sights is likely former risk and compliance boss Lara Warner. The Greensill and Archegos scandals occurred during the tenure of the US and Australian dual nationals – in both cases there was a flagrant failure of risk monitoring – for which Warner was ultimately responsible until she was forced to leave the bank in the fall of 2021. Things have been quiet for the now 57-year-old since then; she is not known to have held a position at any well-known financial institution anywhere in the world. She left a LinkedIn contact request unanswered.

When it comes to personal responsibility for the Greensill case, Eric Varvel’s name is also mentioned in CS circles. Sources therefore consider it very likely that Finma is also conducting enforcement proceedings against the American. Varvel was head of asset management until April 2021, which was formally subordinate to asset management. But Varvel ran the division very independently and was not persuaded, they say.

Varvel was instrumental in the distribution of the supply chain funds; he praised them to clients as a miracle investment – with attractive returns and low risks. The most important question will probably be whether Varvel has sufficiently informed customers about the risks of the investments. The long-standing CS executive currently works as a ‘senior advisor’ at the American company Global Infrastructure Partner. The company declined to comment when asked about potential enforcement proceedings against Varvel.

According to sources close to the former CS leadership, the former CS number two, Pierre Olivier-Bouée, may also have been the target of enforcement proceedings. It was former CS Tidjane Thiam’s confidante who organized the surveillance through unofficial channels such as WhatsApp chats. When the prosecution of ex-CS CEO Khan became public in 2019 amid much media fuss, the Frenchman left the group leadership. After the shadow of the then head of human resources, Peter Goerke, came to light, the bank fired him without notice. According to Finma, the CS planned and largely implemented a total of seven observations between 2016 and 2019.

The three ‘Spygate’ cases against CS managers have now all been completed; in two of them, those affected had promised Finma that they would never work for a Swiss financial company again – this is what Finma calls a waiver. Bouée now works at management consultancy Capgemini in Paris. The company did not respond to a request for comment on the subject.

In light of the Spygate scandal, it is also known that the bank’s former head of security has been subject to renewed enforcement proceedings. His lawyer confirms that his case is one that can be resolved through a so-called waiver.

What about Thiam?

This raises the question of who was the target of the third ‘Spygate’ investigation: former CS managers and ex-members of management all point to ex-CS boss Tidjane Thiam – but hard evidence that Thiam actually exists. purpose of an enforcement procedure. Thiam’s environment emphatically denies that the ex-CS boss has ever been in Finma’s sights. It is said that anyone who claims otherwise will face lawsuits.

The 61-year-old has no need for bad press from his time as CS boss, which lasted from 2015 to 2020, as Thiam aims for higher places: shortly before Christmas he was elected chairman of the Democratic Party of Ivory Coast, the largest opposition party in the African country of Ivory Coast. Thiam wants to become president of the country in 2025.