From 2012, Credit Suisse (CS) bribed senior Mozambican officials to secure a completely useless $2 billion loan, a move that helped the bank—one of the world’s largest and supposedly respectable institutions because it was regulated by Switzerland—avoid collapse. The chart below shows the share price in Swiss francs; the falling price in 2012 indicates that the bank was in trouble and staff were under pressure to lend money, with little scrutiny of how the loans were arranged. The strategy worked, and the share price rose significantly after the Mozambique loans.
Even before the Mozambique deal, CS had a record of misconduct. Traders had overvalued securities by $3 billion to boost their bonuses, violating U.S. and EU exchange controls, laundering money for cocaine dealers, and assisting U.S. citizens in filing false tax returns. The success of the secret Mozambique loans was followed by even larger deals, including a $10 billion loan to the UK firm Greensill Capital and a $5.5 billion loan to the U.S. firm Archegos Capital, both of which collapsed in 2021. The Archegos founder had already been found guilty of securities fraud—a fact known to Credit Suisse before the loan—while Greensill was known to be using questionable accounting methods.
Throughout these scandals, CS continued to receive backing, most notably from the Norwegian sovereign wealth fund, which held 5 % of the bank’s shares and rejected campaigners’ calls to withdraw. In 2013, CS was valued at $50 billion and its shares were worth CHF 25; by 2017, the price had fallen to half that amount. Last month, UBS bought CS for $3.2 billion, or CHF 0.76 per share. By failing to heed the warning signs, the Norwegian wealth fund lost more than $1 billion.
It could be argued that CS was set on this path by the international community after the 2008 economic crash. Production and consumption were insufficient, and the obvious remedy seemed to be giving money to anyone who would spend it on goods and services to stimulate the economy. Instead, central banks implemented “quantitative easing,” providing money to banks to encourage lending and investment. Giving the money to banks rather than directly to people created more money in circulation than could be easily used, leading to “loan pushing”—banks pressuring businesses and governments to take unnecessary, risky loans. In Credit Suisse’s Mozambique case, this was done corruptly through bribes to senior officials.
Another effect of quantitative easing was the shift of funds into speculation and hedge funds, which drove up asset prices, especially property. This sparked building booms in many cities, including Maputo, where apartments were bought—often with illicit money—and left empty as investments. The most significant impact, however, was that the money flowed to the already very rich, widening the global gap between rich and poor. Had some of the funds been given directly to Mozambicans and other Africans for consumption rather than to banks for corrupt and speculative investments, the outcome could have been very different.
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