Credit Suisse boss resigns following UBS spying scandal

Credit Suisse said Tuesday that a top executive had resigned after assuming responsibility for the bank's decision to spy on a star banker after he jumped ship to competitor UBS.

Credit Suisse boss resigns following UBS spying scandal
Photo: Fabrice COFFRINI / AFP

The Swiss banking giant said that its chief operating officer Pierre-Olivier Bouee had stepped down following an internal investigation into the spying scandal, which has shaken Credit Suisse in recent weeks.

It stressed though that the Homburger law firm which conducted the internal probe found no indication the bank's chief executive Tidjane Thiam was implicated in the decision to have the former head of the wealth management unit, Iqbal Khan, tailed.

Credit Suisse, Switzerland's second largest bank after UBS, also said there was no evidence that Thiam was even aware of the decision before the scandal erupted on September 18.

Swiss media on that day revealed that Credit Suisse had ordered surveillance of Khan, a star banker in Swiss financial circles, over fears he was preparing to poach employees and clients and entice them to follow him to his new employer, where he is due to take up his duties on Tuesday.

The revelation came after Kahn confronted the private investigators tailing him, leading to a fight in the heart of Zurich. Kahn pressed charges. Amid the media frenzy, Credit Suisse's board decided to launch an internal investigation.

The probe found that Bouee had ordered the surveillance of Kahn on August 29, when UBS announced his hire. “The COO said that he alone, in order to protect the interests of the bank, decided to initiate the observation of Iqbal Khan,” the bank said in a statement, citing the findings of the internal investigation.

It found that “he did not discuss it with Credit Suisse's Chief Executive Officer, any other member of Credit Suisse's Executive Board, the Chairman of the Board of Directors of Credit Suisse or the Chairman of its Audit Committee,” it added.

And it stressed that neither the internal probe nor the surveillance of Khan meanwhile “identified any evidence that (he) had attempted to poach employees or clients away from Credit Suisse, contrary to his contractual obligations.”

The board said that it appreciated efforts to take “appropriate measures to protect the company's interests, including when senior employees leave the company.”

“However, the Board of Directors considers that the mandate for the observation of Iqbal Khan was wrong and disproportionate and has resulted in severe reputational damage to the bank,” it said.

Credit Suisse said it had appointed James Walker, who is currently finance chief at its US division, to replace Bouee “with immediate effect”. 

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Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?

When it comes to borrowing money from a Swiss bank, nationality may play a role in some cases, but not in others. This is what you should know about this process.

Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?
Getting a losn in Switzerland is subject to many conditions. Photo by Claudio Schwarz/Unsplash

Like almost everything in Switzerland, consumer loans are regulated by legislation, in this case the Consumer Credit Act.

It defines a loan as between 550 and 80,000 francs, “offered by commercial providers of financial services”. Lower or higher amounts are not subject to the Consumer Credit Act.

As is the case in many other countries, Swiss banks have strict criteria about who they lend money to. After all, no financial institution wants to deal with people who are not creditworthy.

Whether or not a foreign national can borrow money from a bank depends on their permanent place of residence and permit status.

As a rule, Swiss lenders don’t give loans to non-residents. So if you reside abroad, there is practically no chance that a bank in Switzerland will lend you money.

However, some financial institutions make exceptions for cross-border workers. If you fall under this category, you can use this interactive tool, select “ Permit G” under “Residence Permit” and see what, if any, options, there are.

READ MORE: EXPLAINED: What cross-border workers should know about taxation in Switzerland

If you are a foreign national but have a permanent residence status (Permit C), your chances of getting a loan are practically the same as those of Swiss citizens — provided, of course, that you meet all the requirements set by lenders (see below).

What about other permit holders?

If you have a B Permit, you might be approved for a loan, depending on how long you have had this permit — obviously, the longer the better.

However, “you may be offered a higher interest rate or a limited loan amount. This is because of the statistically higher probability that you will return to your home country. Some lenders require the loan to be repaid by the time the B permit expires”, according to consumer comparison site 

Holders of other, temporary or conditional permits are not accepted.

READ MORE: ‘A feeling of belonging’: What it’s like to become Swiss

What conditions — other than residence permit — should you fill to be considered for a loan?

You must be at least 18 years of age, though additional restrictions may apply to applicants under 25 — for instance, a higher interest rate or a limited loan amount. That’s because “lenders are generally more cautious with young applicants as their financial circumstances are usually less settled and the risk of default is deemed to be higher,” Comparis noted.

The same cautious approach applies to pensioners, especially those who have no regular income. The social security payments (AHV/AVS) do not count as income for the purpose of the loan.

There is also other eligibility criteria, based on employment status and salary. People with a regular income have a higher chance of obtaining a loan than those who are self-employed, temporarily employed, work on hourly basis or, logically, unemployed.

Other factors, including your existing debts, are also taken into account in the decision process.

Basically, lenders favour applicants with a stable income and good financial standing, in much the same way as supplemental health insurance carriers prefer young and healthy people.

Keep in mind that if your loan application is rejected, this will be recorded in the database of the  Central Office for Credit Information, making it more difficult, though not impossible, to get a loan in the future.

The same rules do not apply to American citizens

That’s because Swiss and European banks are subjected to US demands to disclose the assets of Americans overseas in order to prevent tax evasion.

As adherence to these requirements is a major headache for the banks and in some cases also violates their country’s privacy laws, financial institutions prefer not to deal with Americans at all, even those who are permanent residents.

If you are a US citizen who also has Swiss nationality, you may have an easier time of it, but could still face hurdles in obtaining loans and other banking services.

There is no immediate relief in sight, although many organisations representing Americans abroad are lobbying in Washington to change the existing legislation.