Credit Stupid?

Did Credit Suisse have a James Bond complex?

Consider this business model. In order examine your finances, you have to: 1) leave the country; 2) call your banker in Switzerland; 3) fly to Switzerland; 4) meet your banker in a nondescript white room; 5) view your statements—in person only; 6) verbally instruct your banker what to do; 7) receive any money from the account in cash; 8) tell your banker to destroy all written records; 9) return home.

I’m not making this up. This is customer service? Apparently, a lot of people managed their money just this way, calling theirs bankers from Mexico and flying to Zurich for a meeting. Credit Suisse even opened up a branch at the Zurich airport to make it more convenient for clients—they could have their meetings during flight layovers on their way somewhere else.

Apart from satisfying a desire to play “

,” what possible business purpose did all these cloak-and-dagger maneuvers accomplish? Clearly, they were designed to avoid having records of the client’s wealth and income available to anyone. This wasn’t confidential financial advice and tax-planning. These were accounts designed to evade any reporting.

You can avoid taxes with legal structures that carry opinion letters from counsel and have a legitimate economic function—like tax-exempt munis, or limited partnerships that return capital. Or you can sneak around, hide the income, and just not report it. Clearly, Credit Suisse’s approach was the latter.

It can be fun to play James Bond. Until you get caught.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2017-07-17T12:34:21+00:00 February 28th, 2014|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

Leave A Comment