Ulrich Körner faces his first take a look at as Credit Suisse chief government subsequent week because the financial institution goes on trial in Singapore over its previous relationship with Georgia’s former prime minister Bidzina Ivanishvili.
Billionaire Ivanishvili, who’s Georgia’s richest individual, is pursuing the Swiss lender for as much as $800mn in damages, having already been awarded $607.5mn from the financial institution in a associated case in Bermuda this 12 months.
Körner — Credit Suisse’s fourth chief government since 2005, who final month changed Thomas Gottstein — is grappling with a significant overhaul of the lender’s funding financial institution, which analysts have estimated might result in billions of {dollars} in restructuring prices and require a further capital elevate.
The Ivanishvili case can also be an early problem for Credit Suisse’s lately put in basic counsel Markus Diethelm. Both Körner and Diethelm are former UBS executives who spent greater than a decade combating authorized battles on the financial institution following the monetary disaster.
Credit Suisse can ill-afford one other nine-figure loss after setting apart a complete of SFr3.9bn ($4bn) in internet provisions for litigation because the begin of 2020.
The financial institution’s government board has been holed up in conferences this week — coincidentally additionally happening in Singapore — thrashing out the way forward for the group’s funding financial institution. Analysts at Deutsche Bank mentioned the prices of paring again the unit — outlined as a precedence by Körner, dubbed “Uli the Knife” — would go away a SFr4bn gap within the financial institution’s capital place.
“Running down other parts of the investment bank and selling smaller businesses across divisions could help over time, but this would likely come too late to avoid an equity raise,” wrote Deutsche analysts Benjamin Goy and Sharath Kumar Ramanathan.
Such a transfer would show unpopular with shareholders after Credit Suisse was pressured to lift $1.9bn final 12 months. Its share worth dropped beneath SFr5 for the primary time in additional than three a long time this week, having halved because the begin of final 12 months.
The Singapore trial, which is anticipated to take three weeks, will begin on Monday morning on the nation’s Supreme Court and be heard earlier than Justice Patricia Bergin. The closing arguments are anticipated in December, with a verdict due early subsequent 12 months.
Ivanishvili’s dispute with Credit Suisse goes again to 2011 when he was a personal banking consumer of the group.
It was then that particulars emerged that, for greater than a decade, Credit Suisse non-public banker Patrice Lescaudron defrauded a few of the Swiss financial institution’s most delicate accounts — together with these held by Ivanishvili and Russian oligarch Vitaly Malkin — funding a lavish life-style of luxurious homes, sports activities vehicles, Rolex watches and presents of Chanel jewelry.
A damning report into the affair by the Swiss regulator Finma, which was inadvertently made public in February final 12 months, discovered repeated warning indicators, proof of a whole bunch of suspicious transactions and 4 formal disciplinary proceedings that weren’t acted upon by Credit Suisse.
The financial institution has lengthy maintained that Lescaudron — who was criminally convicted in 2018 and died by suicide in 2020 after an early launch — was a extremely profitable rogue operator who labored tirelessly to cover his criminal activity from superiors and colleagues. The Swiss prison case in opposition to Lescaudron discovered the financial institution to have been a wronged social gathering.
Ivanishvili tried to sue Credit Suisse in New Zealand, one of many international locations — alongside Singapore and Bermuda — the place the financial institution arrange funding autos for rich purchasers. But the nation’s High Court dominated in 2018 that the case must be heard in Switzerland.
He is anticipated to present video proof from Georgia within the trial. His legal professionals, Drew & Napier, are anticipated to argue that Credit Suisse’s Singaporean subsidiary, Credit Suisse Trust, did not evaluate the investments, didn’t defend the property and didn’t precisely account for them.
However, an individual briefed on Credit Suisse’s authorized defence mentioned the case would relaxation on whether or not employees within the Singapore subsidiary had been social gathering to the fraud with Lescaudron, which the financial institution denies, or acted in good religion.
They added that it was too early for the financial institution to take provisions or inform the market about potential losses.
Neither aspect has proposed settling the case to this point, based on individuals briefed on the method.
Credit Suisse mentioned it “does not comment on ongoing litigation matters”, whereas Ivanishvili declined to remark.
Ivanishvili, who served as Georgia’s prime minister between 2012 and 2013, amassed an estimated $4.8bn fortune in metals and banking, based on Forbes.
In current years, he has spent hundreds of thousands accumulating large timber and transporting them by barge to his non-public backyard on the Black Sea shoreline, which is partly open to the general public. A documentary concerning the billionaire’s newest pastime, Taming the Garden, premiered on the Sundance Film Festival final 12 months.
