Credit Suisse charged in money laundering case; Coinbase files IPO

Receiving Wide Coverage ...

The hits just keep on coming

Credit Suisse “was charged by Swiss prosecutors Thursday for allegedly failing to prevent money laundering through the bank by clients and an employee, in a case stretching back more than a decade,” the Wall Street Journal reported. “The Swiss attorney general’s office said Credit Suisse didn’t comply with provisions against money laundering or the bank’s own internal rules between 2004 and 2008 in opening and monitoring customer accounts. It alleged that those and other flaws in the lender’s controls allowed a Bulgarian criminal organization to launder money through the bank during those years with the help of a bank executive.”

“The charges come as Credit Suisse tries to untangle itself from a raft of mishaps this year that included fallout from a corporate-spying scandal. In 2014, it pleaded guilty to helping Americans evade taxes by hiding their wealth, as part of a settlement with the U.S. Justice Department.”

The bank said it was “astonished” by the charges and promised to “defend itself vigorously,” the Financial Times said. “The probe has been in progress for more than a decade, Credit Suisse pointed out, during which prosecutors’ original accusations have been wound back as various lines of inquiry have hit legal walls or failed to turn up evidence.”

“The indictment is the latest episode in a string of woes for Credit Suisse. At the height of the coronavirus pandemic in the spring, it was caught up in scandals at Luckin Coffee and Wirecard, having worked on deals for both. The Swiss bank also launched an internal review over its supply chain finance funds linked to SoftBank and Greensill Capital.”

Cashing in

“Coinbase Global Inc., the largest U.S.-based cryptocurrency exchange, said it has filed with the Securities and Exchange Commission for an initial public offering, the first major bitcoin-focused company to test the public markets,” the Journal reported. “The filing positions San Francisco-based Coinbase to be one of the first big IPOs of 2021, in what is expected to be another big year for companies going public.”

“Coinbase’s IPO filing comes just a day after bitcoin topped $20,000 for the first time in its 12-year history. The digital currency’s value has nearly tripled in 2020.”

“Cryptocurrency advocates have eagerly awaited Coinbase’s listing, believing it could help the sector gain legitimacy in the eyes of regulators and the public,” the Financial Times said. “A stock market debut would make Coinbase the first big public cryptocurrency exchange in the U.S.”

“Founded in 2012 by the former Airbnb engineer Brian Armstrong and former Goldman Sachs trader Fred Ehrsam, Coinbase has become the largest U.S.-based cryptocurrency exchange, helping widen adoption and trading of digital tokens. Investors led by Tiger Global Management valued the company at $8 billion in a $300 million round of funding in 2018, making it one of the most valuable cryptocurrency companies.”

Coinbase “has become the most valuable American cryptocurrency company by making it easy for people to buy and sell Bitcoin and other digital tokens,” the New York Times said. “The firm takes a fee each time a customer places a trade order … [and] has raked in hefty revenues recently as the price of cryptocurrencies has shot up.”

Wall Street Journal

Good timing

“A delay in the end of Libor might come at just the right time” for the mortgage business."

“U.S. regulators in November backed a proposal that while new debt still shouldn’t be linked to Libor beyond 2021, many existing debts can continue to reference it for another 18 months, through June 2023. That means the transition period for many loans may be put off to a time when rates are less extraordinarily low, which could be a good thing.”

“Mortgage lenders and servicers will still have to learn whether the move to new benchmarks will affect borrower demand or cause complaints. But testing a new system now, while demand for many floating-rate loans is low, and then allowing more of the transition to play out in a different rate environment should promote a smoother transition.”

Washington Post

A risk 'worth taking'

Citigroup will be taking a risk in January when it starts “offering 12-week sabbaticals (at 25% pay) to staff in North America who’ve been at the company for five years or more — a parting gesture from the CEO [Michael Corbat] before he steps down in February. The bank will also offer a month of fully paid leave to anyone who wants to work pro bono for a charity. The risk is that a valued (and hard to replace) employee takes time off when they’re needed most, or worse, that they find a new calling and don’t come back.”

“But these are risks worth taking,” a Bloomberg analysis argues. “It’s time the finance industry, and the corporate world more generally, started being a little less fearful about easing the pressure on employees. The hard part for Citi will be making sure staff feel this is indeed a serious option, and one that won’t penalize their prospects. Let’s hope Citi’s vision on the future of work becomes a template for others.”