A tweet is said to have heralded the demise of CS. Social media as a gravedigger for a big bank? It is not that easy.
The Australian TV journalist David Taylor wrote in early October: “Credible sources tell me that a large international investment bank is on the brink.” He does not name Credit Suisse. But the tweet went viral. The name Credit Suisse quickly comes into play. Credit Suisse on the verge of collapse? Bankrupt? Too big to fail?
Since October 2022, rumors triggered on social media have led to massive outflows of customer deposits from Credit Suisse.
Last Wednesday, video of the President of the Saudi National Bank announcing that he would no longer inject money into Credit Suisse went viral on social media. The share price falls even further – the rest is history – the end of CS.
Mismanagement or Social Media?
At the media conference on Sunday, those responsible at CS and the financial market regulator Finma saw the reason for the loss of trust not in mismanagement, but above all in social media. Marlene Amstad, Chairman of the Board of Directors of Finma: “Since October 2022, rumors triggered on social media have led to massive outflows of customer deposits at Credit Suisse.”
Axel Lehmann, Chairman of the Board of Directors of Credit Suisse, agrees: “Many clients have been very loyal and faithful for a long time. Then last fall, the social media storm had a huge impact.”
Legend:
Keystone/Michael Buholzer
Social media as a gravedigger for a big bank – it’s not that easy. Business psychologist Christian Fichter deals with the psychological foundations of economic and social behavior. “Social media is certainly not solely to blame, but I can understand that the statement was made there. Social media play a very large part in the formation of opinions today and unfortunately the opinion is formed through tweets or through information without checking the facts.”
excuse of the guilty
Behavioral economist Sandro Ambühl, who specializes in financial markets, sees it as an excuse to look for the culprit in social media. “Once the information comes out, it’s extremely valuable to investors, and they want to do everything they can to get the best information they can as quickly as possible. If there were no social media now, people would all be at this press conference with a phone and they would immediately be communicating on the phone instead of on Twitter.”
However, the influence of social media cannot be completely dismissed, especially at the American Silicon Valley Bank. Thousands of tweets flooded the internet in the days and weeks leading up to the collapse. “Run to the bank! Get your money out!” The result: over 40 billion drain within hours. This leads to the first internet based banking run.
That also means that a tweet alone does not bring down a bank, but it can speed up the whole thing – as with CS. Business psychologist Fichter: “I think it would probably have happened that way, simply because the downward spiral of a bad image, of presumably bad leadership and of large investors who have given their minds would probably have been unstoppable.”