Enterprise Risk Management at Credit Suisse

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Case Details:

Case Code : ERMT-024
Case Length : 27 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : Credit Suisse
Industry : Banking
Countries : Switzerland

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note Contd...

The stock market crash of 1987 prompted First Boston to merge with CSFB the next year. In 1990, CS (renamed CS Holding) injected $300 million into CSFB and shifted $470 million in bad loans from its books, becoming the first foreign owner of a major Wall Street investment bank.

In the early 1990s, CS Holding strengthened its insurance business with a Winterthur Insurance alliance. Acquisitions helped it increase share in the domestic market. In 1996, CS Holding reorganized as Credit Suisse Group and grew internationally, merging the US investment banking operations into Credit Suisse's more staid and relationship-oriented corporate banking.

It bought Winterthur (Switzerland's #2 insurer) in 1997, as well as Barclays' European investment banking business.

CS and other Swiss banks came under fire for refusing to relinquish assets from of bank accounts jews, from the Holocaust era and for gold trading with the Nazi regime.

In 1997, the banks agreed to establish a humanitarian fund for Holocaust victims. A stream of lawsuits by American heirs and boycott threats from US states and cities led in 1998 to a tentative $1.25 billion settlement. CS was asked to pay one-third of the amount1.

In 1998, CS expanded its investment banking activities by buying Brazil's Banco de Investimentos Garantia. It also expanded its money management operations in the US through an alliance with New York-based Warburg Pincus Asset Management, which CS bought out for $650 million in 1999.

In 2001, CS acquired Spanish broker and asset manager General de Valores y Cambios.

The collapse of CS's share price, and criticism of the bank's over ambitious acquisition strategy, led to the resignation of CEO and Chairman Lukas Mühlemann in 2002.

Excerpts >>

1] In 2000, CS started a mortgage and home-buying Web site and decided to allow searches of Holocaust-era accounts.


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