Credit Suisse To Tighten The Reins After String of Scandals

Credit Suisse will unveil a new centralized structure on Thursday in an attempt to bring its far-flung divisions to heel and draw a line under a string of scandals that have cost the Swiss bank billions of dollars, two sources said.

Over the past year, Credit Suisse has been fined for arranging a fraudulent loan to Mozambique, tarnished by its involvement with defunct financier Greensill, racked up $5.5 billion in losses when U.S. family office Archegos collapsed, and been rebuked by regulators for spying on executives.

Credit Suisse drafted in seasoned banker Antonio Horta-Osorio as chairman in April to stop the rot and he will lay out his charter to reform Switzerland’s second-biggest bank on Thursday when it presents third-quarter results.

One key change is expected to be the creation of a single wealth management division that caters to a global elite, centralizing oversight at the bank’s headquarters in Zurich, two people familiar with the matter told Reuters.

Under the current structure put in place six years ago, wealth management straddles three divisions: a Swiss business, an Asia-Pacific arm catering mainly to rich Chinese and an international arm based out of Switzerland.

Merging the wealth division would make Credit Suisse simpler and potentially pave the way for cost cuts.It would also rein in local bankers who have enjoyed much autonomy, making them more answerable to senior managers who have often been blindsided by the risks that triggered past scandals, the sources said.

One of the people told Reuters that managers at the bank’s headquarters had become very risk averse and they did not want to give leeway to local bankers, regardless of how much profit they were making. A spokesman for Credit Suisse declined to comment.

Credit Suisse’s financial humiliation stands in stark contrast to its cross-town rival UBS (UBSG.S). In the wake of massive losses and a bailout during the financial crisis, UBS successfully pivoted away from investment banking to wealth management and is now the world’s largest wealth manager with $3.2 trillion in invested assets.

Its shares have climbed 57% in the past 10 years while Credit Suisse has slumped 53% over the same period.Shareholders have deserted Credit Suisse this year following the slew of bad headlines. Its shares are down 12% while UBS is up 36% while Wall Street rivals are riding high on the back of a boom in equity trading and M&A.

Andreas Venditti, an analyst at Swiss private bank Vontobel, said it would take more than “minor changes and a new divisional set-up” at Credit Suisse to reverse the trend.The expected revamp at Credit Suisse has also encouraged some high-profile dealmakers to approach the bank’s senior management to suggest it merges with a rival, another person with knowledge of the matter said.

Those ideas have been rejected so far, however, the person said. Nonetheless, the prospect of a challenge by investors demanding the break-up of the bank, or that its shrinking market value makes it a target for a hostile foreign takeover, have long troubled managers, sources told Reuters earlier this year.

‘WARNING SIGNALS’

With a market value of $28 billion, Credit Suisse is worth less than half of UBS and a fraction of Wall Street giants such as JPMorgan (JPM.N) weighing in at half a trillion dollars. But an approach from the United States would not go down well in Switzerland. Relations between Swiss banks and Washington were damaged when the United States pressured them into giving up their strict secrecy code more than a decade ago.

A combination of Credit Suisse and UBS, which has been touted as an alternative alliance, would face its own problems. For one, it would dominate the Swiss market. Another source said that while Credit Suisse had examined a sale or spin-off of its asset management business, that had been shelved. The person said, however, that once further efforts were made to cut costs and boost growth, a sale, or listing of the business on the market, could be back on the cards.

The bank’s drive to centralize its operations is drawing on lessons from some of its recent failures, including Archegos. Earlier this year, Credit Suisse published a report blaming a focus on maximizing short-term profits and enabling “voracious risk-taking” by Archegos for failing to steer the bank away from catastrophe.

Despite long-running discussions about Archegos – by far the bank’s largest hedge fund client – Credit Suisse’s top management were apparently unaware of the risks it was taking.

The bank’s chief risk officer and the head of its investment bank recall hearing about it first only on the eve of the fund’s collapse. “There were numerous warning signals,” the report said. “Yet the business … failed to heed these signs.”

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Source: Credit Suisse to tighten the reins after string of scandals | Reuters

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Related Contents:

B. H. Meyer; Hans Dietler (1899). “The Regulation and Nationalization of the Swiss Railways

Hill, Kelly (1999). Cases in Corporate Acquisitions, Buyouts, Mergers, and Takeovers. Gale. ISBN 0-7876-3894-3.

Atkinson, Mark (4 August 2000). “Swiss banks agree $1.25bn Holocaust deal”. The Guardian

Grant, Linda (19 August 1996). “Will CS First Boston Ever Win?”. Fortune. pp. 30–34. Archived from the original

Strom, Stephanie (30 July 1999). “Japan Revokes Credit Suisse Unit’s Banking License”. The New York Times.

Kandell, Jonathan (March 2012). “Swiss Banks Adjusting To Radical New Regulations”. Institutional Investor. Vol. 46 no. 2. p. 33.

Crawford, David (8 November 2012). “Germany Probes UBS Staff on Tax-Evasion Allegations”. The Wall

Owen Walker (30 July 2020). “Credit Suisse launches restructuring after trading profit boost

5 Tiny But Impactful ‘Microaffirmations’ To Make Everyone on Your Team Feel Valued and Included

When it comes to making sure colleagues from different backgrounds feel comfortable at work, tiny things really do matter. We often hear about how “microaggressions” like always expecting female employees to organize birthday cards or questioning non-white colleagues about “where they’re from” can alienate, exhaust, and distract people at work.

But the opposite is also true. Even small actions and moments of thoughtfulness can make people feel welcome, valued, and included. New research out of the University of Kansas, for instance, found simply having male allies who spoke positively about gender equality helped make women working in unbalanced tech and science fields feel more supported.

Microaggressions matter, but so too do “microaffirmations.” These “are little ways that you can affirm someone’s identity; recognize and validate their experience and expertise; build confidence; develop trust; foster belonging; and support someone in their career,” according to Change Catalyst CEO Melinda Briana Epler, who has worked on diversity issues for 25 years.

Microaffirmations cost nothing and take mere seconds but can make a big difference to how well your company lives up to its ideals (and attracts and retains diverse talent). In a recent TED Ideas post, Epler laid out 13 of them, but here are five to get you started.

1. Mirror the language that someone uses to describe their own identity.

Can the fast-changing rules about the “right” words to use around sensitive subjects and identity markers seem confusing sometimes? Sure, but there’s an easy solution that doesn’t require keeping up with complicated theories or ever-changing debates. Just talk about people the way they talk about themselves.

“Listen and learn how someone pronounces their name, describes their identity and uses their pronouns. Then mirror the language they use to describe themselves — it shows them you’re paying attention and that you care about them,” instructs Epler.

2. Acknowledge important holidays and life milestones.

Not everyone in your office may celebrate the same holidays or tick through the same life milestones. But everyone you work with deserves to have the biggest occasions in their lives recognized by their colleagues.

“Keep an eye out for key moments that might be important in someone’s life, and recognize them. You might wish them a lovely Diwali if they celebrate it,” Epler offers as an example of a long list of potentially relevant occasions including Juneteenth, Ramadan, Yom Kippur, Pride Month, etc.

3. When someone isn’t participating, take notice and support them.

It’s easy to write off someone who is quiet in meetings or brainstorming sessions as simply short of courage or ideas, but if you do so, you’ll likely miss out on both valuable insights as well as a chance to bring out the best in your people.

“A person who is feeling marginalized or excluded, tokenized or like an impostor may sideline themselves — by not speaking up, not contributing, not showing up. In the remote workplace, people may turn off their video because they aren’t engaged, don’t have a home environment they want to show on video, feel excluded, or are burned out from inequities and exclusion. Check in with them, and see if and how you can support them,” advises Epler.

4. Invite someone to speak and share their expertise.

If you’re invited to speak on an all-white guy panel or notice a certain sameness in who gets chosen for the big presentations around your office, fixing that lack of diversity isn’t just in the hands of the organizers. Epler urges those with clout to help push forward underrecognized talent in their professional circles.

“If you’ve been invited to give a speech or presentation, ask if you can bring an expert colleague with you to the stage, or consider stepping back and recommending someone who isn’t often asked to speak,” she suggests, adding that “if you’re asking someone to share their expertise at a corporate event or at an event that makes a profit, make sure they are paid equitably for their expertise.”

5. Provide both positive feedback and constructive criticism.

Studies show that women in particular are often give only “nice” feedback that ignores areas for improvement and robs them of opportunities to learn and grow. So be cognizant of your constructive criticism and make sure you’re not shying away from sometimes awkward but ultimately beneficial conversations with certain members of your team.

On the other hand, Epler reminds bosses to also remember to mix praise for what’s positive in with notes on what to work on. “When I was in film school working with actors, one of my directing teachers taught us that you should always give an actor two to three pieces of specific positive feedback before providing negative or constructive feedback. It can make a big difference in their next performance,” she writes.

Author image for Jessica Stillman

Source: 5 Tiny but Impactful ‘Microaffirmations’ to Make Everyone on Your Team Feel Valued and Included | Inc.com

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“Organization Science – INFORMS”

Maritime Rope May Be a Large Source of Microplastics Pollution

We’ve been hearing a lot lately about how disintegrated waterborne trash is one of the main sources of ocean microplastics pollution. A new study, however, suggests that aging maritime rope could also be making a significant contribution.

Ocean microplastics are tiny particles or fibers of plastic that are suspended in the water, where they get consumed by fish. When those fish are eaten by humans or other animals, the microplastics get passed along into their bodies, potentially causing health problems.

Previous studies have determined that a great deal of microplastics come from plastic packaging and other garbage, which gradually deteriorates after being dumped in or washed into the sea. Other sources include synthetic textile fibers that enter the wastewater stream from washing machines, and even particles of automobile tire rubber that get washed off the roads and down into storm sewers.

All of that being said, scientists from Britain’s University of Plymouth wondered if the polymer ropes used for hauling in fishing nets might also be to blame.

In both lab-based simulations and field experiments, it was initially determined that one-year-old ropes release about 20 microplastic fragments into the ocean for every meter (3.3 ft) hauled. That figure rose to 720 fragments per meter for two-year-old ropes, and over 760 for 10-year-old ropes.

With those figures in mind, it was estimated that a 50-m (164-ft) length of new rope likely releases between 700 and 2,000 microplastic fragments each time it’s hauled in. For older ropes, the number could be as high as 40,000 fragments. It was further estimated that the UK fishing fleet – which includes over 4,500 vessels – may be releasing anywhere from 326 million to 17 billion rope microplastic fragments annually.

“These estimates were calculated after hauling a 2.5-kg [5.5-lb] weight,” says the lead scientist, Dr. Imogen Napper. “However, most maritime activities would be hauling much heavier loads, creating more friction and potentially more fragments. It highlights the pressing need for standards on rope maintenance, replacement and recycling in the maritime industry. However, it also shows the importance of continued innovation in synthetic rope design with the specific aim to reduce microplastic emissions.”

The research is described in a paper that was recently published in the journal Science of the Total Environment.

Source: Maritime rope may be a large source of microplastics pollution

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