Credit Suisse Settles Spying Case With Ex-Wealth Chief Khan

This content was published on July 26, 2021 - 08:05

(Bloomberg) -- Credit Suisse Group AG said it reached a settlement with its former wealth-management executive Iqbal Khan and a private detective firm, calling to a close a spying scandal that rocked one of Europe’s biggest lenders and ultimately led to the ouster of its chief executive officer Tidjane Thiam last year.

“All involved parties have agreed to settle, and this matter is now closed,” a spokesperson for the bank said on Sunday, confirming that it had reached a settlement with Khan, his wife and the private detective firm Investigo. No further details were disclosed. A probe by Swiss financial regulator Finma into the company’s surveillance activities is ongoing.

The settlement closes one damaging chapter for Credit Suisse as it seeks to move past a string of recent scandals. It faces an exodus of senior bankers after suffering twin hits from the collapse of Archegos Capital Management and Greensill Capital. In the aftermath, new chairman Antonio Horta-Osorio pledged a review of the bank’s businesses.

The spying case dates back to 2019, when Credit Suisse hired a private investigator to follow Khan, once seen as a potential successor to the CEO before defecting to rival UBS Group AG. The incident culminated in a physical confrontation in downtown Zurich between Khan and the men who followed him, shaking Switzerland’s financial world and setting off investigations by Zurich’s prosecutor and the company’s board of directors.

Thomas Gottstein, who succeeded Thiam as CEO, sought to steer the firm into calmer waters, but a series of missteps and scandals has since raised questions about the bank’s risk management and culture. Credit Suisse suffered $5.5 billion in losses from the collapse of Archegos, the family office of Bill Hwang, more than any other bank. It also had to freeze a $10 billion group of funds this year that it ran with Greensill Capital.

The scandals have thrown the lender into deepest crisis in years and prompted the departures of several top executives. Its shares are down about 20% this year, while rivals rallied as the economy recovers.

Credit Suisse is set to publish second-quarter earnings on July 29. The settlement in the spying case was first reported by Swiss newspaper NZZ am Sonntag.

(Adds details on recent scandals from fifth paragraph.)

©2021 Bloomberg L.P.

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