The takeover of Credit Suisse allowed UBS to become a market leader in the southern parts of Asia. It will also absorb the now-defunct bank’s risks, as the latest money laundering scandal in Singapore is demonstrating. 

Inadequate risk management has been oft-cited as a major cause of Credit Suisse’s collapse, leading to an emergency takeover by UBS in March 2023. Just one year later, the enlarged Swiss bank is already experiencing this burden firsthand. 

The merger has its benefits, including in Asia. According to chair Colm Kelleher, UBS became the «undisputed number 1» wealth manager in South APAC «at a stroke». But the government-brokered deal also has its downsides, as the money laundering scandal in Singapore is demonstrating. 

Largest Money Laundering Scandal

At S$3 billion ($2.2 billion) in seized assets, the recent laundering scandal is the largest ever in Singapore. And Credit Suisse was the bank with the largest amount of funds linked to the 10 convicted China-born individuals at S$79.6 million, according to court documents. 

In addition to tighter controls, banks with the most related dealings – deposits, loans and other financial services – are expected to face fines and other punitive measures, according to a «Bloomberg» report citing unnamed sources.

Ongoing Probe

The scandal is not yet over and there could be more revelations in Singapore’s banking sector. 

Aside from the 10 arrested in August 2023, another 17 suspects who are not in the city-state are still under investigation with over S$2 billion in seized assets belonging to them. According to a statement by local police, their assets will remain under custody until the court concludes the case.

Luckin Coffee

This is not Credit Suisse’s first private banking scandal in Asia. It previously had dealings with Lu Zhengyao, founder of Luckin Coffee which was embroiled in a 2020 accounting scandal involving inflated sales figures.

Prior to Luckin’s fall, ex-CEO Tidjane Thiam famously called Lu, who is incidentally also a Chinese client, a «poster child» for Credit Suisse’s «one bank» ambitions. This refers to a cross-divisional operating model whereby a financial group acts as a one-stop shop for clients across their private and business needs.