Credit Suisse in the hot seat for telling its clients to shred evidence

Source: Fortune Magazine

Just weeks after Credit Suisse was caught telling clients to shred evidence of its loans to Russian oligarchs, the embattled investment bank has decided to pull out of the country.

Credit Suisse will stop taking on new business in Russia and will help clients close out their Russian exposure, Bloomberg reported. The Swiss bank also plans to move 125 of its employees out of Russia after its invasion of Ukraine.

Cutting ties with Russia may be easier said than done, however, as the bank held loan exposure in Russia of 1.57 billion Swiss francs, or nearly $1.7 billion, at the end of 2021, and its wealth management unit had roughly 4% of its total assets with Russian clients.

Credit Suisse has been in the hot seat this past month after telling investors to “destroy and permanently erase” documents related to loans backed by “jets, yachts, real estate and/or financial assets” of Russian oligarchs.

When asked for a statement about its move out of Russia and the recent reports of shredding evidence, Credit Suisse told Fortune that it isn’t “able to provide additional information beyond what our original statement says.”

The bank provided a link to a March 3 statement in which it admitted to asking “non-participating investors” to "destroy documents," but said that this was "in no way linked to the recent implementation of additional sanctions, with which we are fully compliant."

Bank’s Russia connections

Credit Suisse’s retreat from Russia comes on the same day the U.S. House of Representatives' Committee on Oversight and Reform launched a probe into the bank’s compliance with sanctions on Russian oligarchs.

“This report raises significant concerns about Credit Suisse’s compliance with the severe sanctions imposed by the United States and its allies and partners,” representatives Carolyn B. Maloney and Stephen F. Lynch wrote in a letter to Credit Suisse CEO Thomas Gottstein.

The committee asked Credit Suisse to submit all documents related to its dealings with Russian oligarchs, saying it is “particularly concerned” that Credit Suisse’s directive to destroy documents coincided with Switzerland’s announcement that it would join the U.S and its allies in imposing sanctions on Russia.

Swiss banks have been under fire since the beginning of the war in Ukraine after government data showed they held billions in Russian assets on their books in 2021. The banks have since broken their tradition of neutrality, freezing Russian oligarch’s assets. But the news of Switzerland’s connection to Russia still sparked outrage from Ukrainian President Volodymyr Zelenskiy, who said in a live-streamed address earlier this month: “There must not be questions about Swiss banks, where the money is stored of those that have unleashed this war. It’s a fight against evil. The money of those people must be frozen.”

Last week, the Swiss banking lobby estimated that Switzerland’s banks may hold more than $200 billion of Russian wealth in offshore accounts. But Swiss government officials said during a March 24 press conference that they had found assets belonging to sanctioned Russian individuals worth just 5.75 billion Swiss francs, or around $6.2 billion.