Credit Suisse, because the stock market crashed
European markets plunged today as they were sunk by the collapse of Credit Suisse which it lost 24% after also reaching -30% during the day. A nightmarish day that led European price lists to fall heavily after just one day of respite. The collapse of Credit Suisse, however, did not come unexpectedly: for months the Swiss giant has been navigating bad waters and is trying to restart.
The company is engaged in a major overhaul of its business, after the misadventures of recent years. In 2022, the institute suffered a maxi loss of 7.3 billion francs, which follows the loss of 1.6 billion the year before. At the end of 2022 Swiss credit had closed a $4 billion capital increase in which Saudi National Bank had participated with 1.5 billion becoming the first shareholder with 9.8%. And the collapse, in part, is also the responsibility of the Saudis.
The Saudis are pushing it towards the abyss
In fact, this morning, the largest shareholder of Credit Suisse explained that he will not “absolutely” support the Swiss bank by increasing its capital through its president Ammar al-Khudairy in an interview with Bloomberg Tv. “We currently own 9.8% of the bank. If we exceed 10%, a series of new rules will come into force” and “we are not inclined to enter a new regulatory regime,” al-Khudairy said.
The Chairman of the Board of Credit Suisse Axel Lehmann he still showed confidence this morning. “We have strong capital ratios, a strong balance sheet: so state support is not an issue for our bank,” he said at a financial sector conference in Saudi Arabia. According to the executive “it would not be fair to compare Credit Suisse’s current problems with the recent collapse of Silicon Valley Bank, especially since banks are regulated differently”.
Investors, however, did not give too much weight to Lehmann’s reassurances. The stock closed at 1.70 Swiss francs, down sharply after opening at 2.24 francs, with the capitalization falling below 7 billion. But Credit Suisse had already started to come under pressure on the markets since Friday, after the failure of Silicon Valley Bank. At the close of last Thursday, in fact, the stock was at 2.62 francs.
The Risks of Credit Suisse Bankruptcy
Should a Credit Suisse bankruptcy alarm the European banking system? Concern is certainly widespread among the political and monetary leaders of the Old Continent. In the morning the French finance minister Bruno the Mayor he explained that he would “get in touch with his Swiss counterpart in the next few hours”. While the ECB would have asked European institutions for information on their exposure to the Swiss institution.
“Today from Credit Suisse comes another very strong lesion to the financial economy which requires a revision of the capitalism system”, said prof. Robert Guidepresidente dell’European Financial Management Association.
There are those who also speak of default without too many words. Robert Kiyosakico-founder of Rich Dad Company and investor who predicted the collapse of Lehman Brothers, has in fact issued an ominous prophecy: “The problem is the bond market and my prediction is that the next bank to go bankrupt will be Credit Suisse”.