Credit Suisse, the Risk-Taking Swiss Banking Giant, Succumbs To Crisis

Credit Suisse, the Swiss banking giant that liked to live dangerously, has run out of road. From a report: The bank struck a deal this weekend to be bought by rival UBS Group after an uncontrolled slide in its stock and bonds. The agreement marks the end of 167 years as an independent institution, a humbling comedown for a bank that once went toe-to-toe with U.S. giants on Wall Street and boasted a market value greater than that of Goldman Sachs Group. The bank's downfall has roots in the way it exited the last financial crisis flush with confidence. When the financial system seized up in 2008, Credit Suisse emerged in better shape than many rivals. It was then slow to adjust to how the crisis changed banking. The lender relied on a freewheeling investment bank, dawdled in its pivot to more stable lines of business and above all failed to shake its predilection for risk. "They felt, 'We are the winner from the financial crisis, and everyone else is hurt,''' said Andreas Venditti, a banking analyst at Vontobel. "So they doubled down on these kinds of businesses and on investment-banking exposure in general." The result was 15 years of scandal, litigation and strategic zigzags while other major banks became more focused, more regulated and more free of drama. A spying imbroglio, a $5.5 billion loss on a single client, executive turnover, fines in connection with tax and sanctions evasion and a fraud settlement over Mozambican loan sales weakened the bank financially while eroding the confidence of investors.

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