Credit Suisse bank.
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“The investigation found a failure to effectively manage risk in the Investment Bank’s Prime Services business by both the first and second lines of defense as well as a lack of risk escalation,” Credit Suisse said as it published the report of the independent external investigation.
“It also found a failure to control limit excesses across both lines of defense as a result of an insufficient discharge of supervisory responsibilities in the Investment Bank and in Risk, as well as a lack of prioritization of risk mitigation and enhancement measures,” the bank also said.
Nonetheless, the investigation concluded that there had not been “fraudulent or illegal conduct” nor ill intent from its side and its employees.
In the wake of the sandal, the head of its investment bank, Brian Chin, and chief risk and compliance officer, Lara Warner, stepped down. The executive board decided to waive bonuses for the 2020 year, and also cut the proposed dividend.
António Horta-Osório, chairman of Credit Suisse, said Thursday: “While the bank has already taken a series of decisive actions to strengthen the risk framework, we are determined to learn all the right lessons and further enhance our control functions.”
The outcome of the investigation was published at the same time as the Swiss lender reported its second-quarter results.
Credit Suisse said its net income reached 253 million Swiss francs ($278.3 million) for the three-month period ending June, missing expectations in its own poll of analysts. The stock is down 17% year-to-date.
At the end of the first quarter, Credit Suisse reported a hit of 4.4 billion Swiss francs due to the Archegos saga. However, Credit Suisse said Thursday that it was taking an additional pre-tax loss of 594 million Swiss francs related to the hedge fund collapse.