Credit Suisse solves the espionage case with former wealth chief Iqbal Khan

Updates from Credit Suisse Group AG

Credit Suisse has settled one of the most explosive feuds in its history, reaching an out-of-court settlement with its former wealth manager Iqbal Khan as he prepares for his first quarterly results under new president António Horta-Osório on Thursday.

A bank spokesman confirmed that she had reached an agreement with Khan and his wife after they sued Credit Suisse and private investigation firm Investigo, for having followed them through the streets of Zurich. “All parties involved have agreed to settle down,” Credit Suisse said. “This matter is now closed.”

The news was first published in the Swiss newspaper NZZ am Sonntag

Credit Suisse did not give further information on the establishment, while Khan and Investigo did not respond to requests for comment.

The fight between Khan and Credit Suisse, after the banker abandoned rival banks UBS two years ago, was one of Switzerland’s most dramatic corporate scandals, and led to the end of Tidjane Thiam’s ouster as CEO of Credit Suisse last February.

Following Khan’s resignation, Credit Suisse feared trying to attract staff and customers to UBS and hired Investigo to monitor and identify anyone it encountered.

Khan said a group of three men chased him and his wife through the streets of Zurich by car and on foot, culminating in a physical confrontation behind the Swiss National Bank.

Subsequently, Credit Suisse admitted that it had partnered with private investigators to follow up another former executive, Peter Goerke, and that the two surveillance incidents had been ordered by its former head of operations Pierre-Olivier Bouée.

In response, Finma, Switzerland’s financial regulator, has started execution procedures last year on how the bank had breached the law with its supervision and “in particular the question of how these activities were documented and controlled”.

Finma told the FT that its enforcement proceedings against Credit Suisse were not affected by Khan’s agreement.

Credit Suisse was hit by a series of scandals in the two years following Khan’s departure, culminating in the double crisis surrounding a controversial financial firm Greensill Capital and the family office Capital Archives this spring which revealed critical weaknesses in the bank risk management and culture.

The Swiss bank was forced to suspend in March $ 10 billion in funds it had invested in debts linked to Greensill. A few weeks later, it lost $ 5.5 billion after the collapse of Archegos, which was a customer of the bank’s first intermediation unit.

Horta-Osório, former executive director of Lloyds Banking Group, took the chair in April and is reviewed the lender’s risk operations and strategic direction.

Meanwhile, Khan has enjoyed a period of strong growth since he became joint head of UBS’s wealth management division. The unit reported its best second quarter last week, with record profits in Asia. Pre-tax profits to the wealth management arm jumped to $ 1.3 billion, up 47 percent from a year ago.

Khan, who at one point was seen as a potential executive director of Credit Suisse, was granted a one-time payment of $ 8.1 million when he joined UBS.

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