Bank Leu
| File:Bank Leu logo.svg | |
| File:Bahnhofstrasse Grieder.jpg Former headquarters of Leu in Zürich, Switzerland | |
| Industry | Private banking |
|---|---|
| Founded | Template:Sda |
| Defunct | 2007 |
| Fate | Integrated into Credit Suisse |
| Successor | Clariden Leu |
| Headquarters | Zürich, Switzerland |
| Website | www |
Bank Leu AG (; ; originally known as Leu et Compagnie or Leu & Co.) was a Swiss private banking institution based in Zürich, Switzerland. It operated as a Credit Suisse subsidiary from 1990 until its 2007 consolidation into Clariden Leu, holding the distinction of being Switzerland’s oldest bank.
History
The bank was established in 1758 under the name Leu et Compagnie by Johann Jacob Leu, who later served as mayor of Zürich. Initially under state ownership, it underwent privatization in 1798 to safeguard assets from the Helvetic Republic imposed by Napoleon. The institution was restructured as Leu & Co. in 1854 and transitioned into a public limited company () by 1969.
Although it served an elite clientele, including notable historical personalities such as Maria Theresa, the bank’s autonomy was compromised following two significant scandals during the 1980s.
U.S. insider trading scandal
Between 1981 and 1986, Bank Leu’s subsidiary in the Bahamas, Bank Leu International, was implicated in insider trading activities involving Dennis Levine. Levine exploited the Bahamas’ stringent banking secrecy regulations to conceal transactions based on privileged information obtained through his investment banking position, amassing an account valued at over $10 million USD.
Employees at the bank, including the manager of the Nassau branch, illicitly copied Levine’s trades for their own benefit—violating internal policies and leveraging confidential knowledge. Moreover, numerous transactions were funneled through a Merrill Lynch broker located in Caracas who also mirrored Levine’s trades. This unusual activity aroused suspicion within Merrill Lynch, prompting their compliance department to initiate an investigation that ultimately led to a referral to the Securities and Exchange Commission.
Bank officials attempted to rationalize Levine’s trading but also engaged in document destruction and forgery, resulting in obstruction of justice allegations. Upon discovery of these irregularities by attorney Harvey Pitt, the bank began cooperating with SEC inquiries.
A decision by Bahamian Attorney General Paul Adderly established that stock trading did not fall within the scope of banking secrecy laws there, allowing Levine’s identity to be revealed and leading to his arrest.
Despite its cooperation, Bahamian authorities required Bank Leu’s Zürich management to remove the entire board overseeing its Bahamian operations to continue business in the jurisdiction.
Role in Distillers Company transaction
In 1986, Guinness PLC entered a competitive bid for the larger Distillers Company. Contrary to typical takeover patterns where share prices decline during final stages, Guinness’ stock climbed by 25 percent. To artificially inflate its offer value and secure the merger, Guinness paid roughly US$38 million to various parties—including American arbitrageur Ivan Boesky—to purchase $300 million worth of Guinness shares.
Investigations uncovered that Bank Leu participated in approximately half of these transactions. Two directors from Guinness secretly authorized Bank Leu subsidiaries located in Zug and Lucerne to acquire 41 million Guinness shares. Guinness guaranteed reimbursement at cost plus commissions and deposited $76 million with Bank Leu’s subsidiary in Luxembourg to honor this arrangement.
Merger with Credit Suisse
Bank Leu's involvement in significant financial controversies severely affected its standing, culminating in a merger with Credit Suisse in September 1990. Shortly thereafter, it was uncovered that a credit officer at the Duebendorf branch had created fraudulent loans using authentic client identities and distributed the illicit gains within the "Zürich financial underworld," causing losses estimated at 63 million CHFs (approximately US$50 million).
By 1997, Bank Leu underwent restructuring as an autonomous private bank, consolidating its Zürich branches and corporate banking operations under Credit Suisse. In 2007, it combined with Credit Suisse Fides along with three other private banks—Clariden, Bank Hofmann, and Banca di Gestione Patrimoniale—to establish Clariden Leu. Following this, Bank Leu AG redirected its efforts toward private investment activities.