Credit Suisse sells fund to Black Rock

Swiss banking giant Credit Suisse said on Thursday it would sell its stock exchange-traded investment fund business to US investment firm BlackRock as part of a divestment plan announced last July.

Credit Suisse sells fund to Black Rock
Credit Suisse's offices in the centre of Zurich. Photo: Credit Suisse

BlackRock, the world's largest fund group, is a leader in exchange-traded instruments.

Credit Suisse said that at the end of November its so-called ETF business was managing assets worth 16 billion Swiss francs ($17.3 billion), and that the sale was expected to be completed by mid-2013.
The bank did not disclose the terms of the deal which, it said, still needed approval from regulatory authorities.

Swiss media were quick to note that former Swiss National Bank chairman Philipp Hildebrand joined BlackRock last year after stepping down as head of the central bank.

Hildebrand resigned following a controversy over a currency transaction made by his wife through a joint account held with him.

He was named as vice-president of BlackRock  in June 2012 following his SNB resignation five months earlier.

"This is an important strategic step in an industry that requires significant scale," Credit Suisse said of its planned acquisition.

Thursday's announcement was not unexpected, yet Credit Suisse saw its share price rise 0.84 percent to 25.17 Swiss francs in midday trading on a Swiss
stock market marginally down.

"The ETF business is generally a low margin business which needs scale to make it attractive," Vontobel analyst Terese Nielsen said in a note, pointing
out that BlackRock is one of the world's largest ETF providers.

The sector meanwhile currently represents only about four percent of Credit Suisse's managed funds, she said.
ETFs, which enable investors to invest in a bundle of assets in the same category, are traded on the stock exchange in the same way as individual stocks.

They represent assets such as stocks, commodities and bonds.

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Probe unearths second spying case at Credit Suisse

An internal Credit Suisse probe confirmed Monday that a second executive had been spied on, following earlier revelations that the bank's former head of wealth management was tailed by private investigators.

Probe unearths second spying case at Credit Suisse
Photo: Depositphotos

But Switzerland's number two bank maintained that just one senior leader, who has since been forced out, was entirely to blame for both incidents and that rest of the top brass had not been aware of the activities. 

Releasing the investigation conducted by the Homburger law firm, Credit Suisse said that “it has been confirmed that Peter Goerke, who was a Member of the Executive Board at the time, was placed under observation by a third-party firm on behalf of Credit Suisse for a period of several days in February 2019.”

The probe was launched following media reports last week that spying at Credit Suisse ran deeper than one case.

The banking giant was shaken by the discovery last September that surveillance had been ordered on star banker and former wealth management chief Iqbal Khan.

READ: Credit Suisse boss resigns following spying scandal

Kahn was tailed after he jumped ship to competitor UBS, sparking fears he was preparing to poach employees and clients.

That revelation came after Khan confronted the private investigators tailing him, leading to a fight in the heart of Zurich. Khan pressed charges.

An initial investigation by Homburger blamed former chief operating officer Pierre-Olivier Bouee, who stepped down, but found no indication chief executive Tidjane Thiam was involved.

The probe results released Monday echoed those findings, concluding that Bouee “issued the mandate to have Peter Goerke put under observation.”

“As was the case with Iqbal Khan, this observation was carried out via an intermediary,” it said, stressing that Bouee “did not respond truthfully” during the initial investigation “when asked about any additional observations and did not disclose the observation of Peter Goerke.”

The new investigation also did not find indications that Thiam or others in the board or management “had any knowledge of the observation of Peter Goerke until media reported on it,” the statement said.

“The Board of Directors considers the observation of Peter Goerke to be unacceptable and completely inappropriate” it said, adding that it had issued an apology to Goerke.

It added that “safeguards” were already in place to avoid future similar misconduct. Switzerland's market watchdog FINMA meanwhile said last week that it was “appointing an independent auditor to investigate Credit Suisse in the context of observation activities.”

“This investigator will clarify the relevant corporate governance questions, particularly in relation to the observation activities,” a statement said Friday.