Reporter丨Li Huilin Editor丨Chen Xiaoping
Centennial financial giant has come to the crisis.
Since October, the news that Credit Suisse is on the verge of bankruptcy has fermented several times, and its stock price has hit a new low, and its market value has fallen below 10 billion US dollars. It has only stabilized slightly in recent trading days.
This 166-year-old bank has suffered a lot of misfortunes, suffered negative consequences, and lost huge profits. The bankruptcy rumor of seems to be the last straw, slowly crushing the remaining confidence .
, the new CEO who has been in the 3-month position, is trying various measures to save his fall. The global financial market is worried about the recurrence of the Lehman Brothers crisis.
Credit Suisse new CEO Kornar Source: Credit Suisse official website
Some experts told the reporter of "21CBR" that Credit Suisse is in a dilemma, mainly in its own operations, and may be an isolated incident; global central banks also have lessons from the past, even if they go bankrupt, it will not cause a chain reaction when Lehman goes bankrupt.
Worry spread
Worry about Credit Suisse's emotions are spreading Wall Street .
In the past week, Credit Suisse's five-year loan default insurance (CDS) soared rapidly, reaching a historical high of 335 basis points as of the 12th local time.
CDS is roughly equivalent to insurance for bond defaults. The higher the basis point, the greater the debt repayment risk. investors' confidence has dropped sharply and are eager to purchase default protection .
html At the beginning of 3, this indicator was only 57 basis points.
To calm people's hearts, CEO Corner signed a memorandum earlier this month to show his wealth, saying that the company has nearly $100 billion in capital buffer . At the end of June, it still owns high-quality current assets of about $238 billion.
"I have seen this script, and I also said similar before Lehman Brothers went bankrupt." The unhappy Wall Street Journal reporter said such a sharp comment.
Credit Suisse's worries are focused on its potential repayment pressure.
As of the end of June, Credit Suisse's exposure to leverage risks reached as high as US$873 billion. Some analysts predict that will face a funding gap of up to US$8 billion in in 2024.
There is a view that the market has overreacted.
Researcher at the Securities and Futures Institute of Central University of Finance and Economics analyzed to the reporter of "21CBR" that from a financial perspective, based on the higher capital adequacy ratio and better liquidity, Credit Suisse's probability of bankruptcy is not high.
CET1 (common equity tier 1 capital ratio) is the core indicator for measuring investment banks' capital adequacy ratio. In the second quarter, Credit Suisse's index was 13.5%, close to 13.6% of HSBC , and even higher than the minimum international regulatory requirement of 8%.
Source: Visual China
Korna said that CET 1 will continue to remain at 13%~14% this year.
During the same period, Credit Suisse liquidity coverage rate was 191%, and its high-quality current assets were about 1.9 times its net cash outflow, which was relatively abundant.
"Simple CDS explosion is not enough to make Credit Suisse bankrupt. In past crises, Credit Suisse has repeatedly proved its own crisis management and financing capabilities." Chen Jia, an independent international strategy researcher, told the 21CBR reporter.
The latest news says that Japan Ruisui Financial Group is interested in acquiring part of the assets of Credit Suisse's securitization product department.
On October 7, Kornar announced that repurchased some corporate bonds for about 3 billion Swiss francs (about 21.5 billion yuan) in cash. The effect of
was immediately effective, and the stock price rose 13.05% that day.
However, the stock price quickly fell back.
As of October 13, Credit Suisse US stock market value was only US$11 billion, only 1/10 of Goldman Sachs; its net assets per share were US$17.15, and the market price could only be sold for US$4.53.
crisis has not been completely eliminated.
Isolated Event
Credit Suisse people are panic and shaking, it is not accidental.
Over the past decade, Credit Suisse's revenue has stagnated and its performance has declined, especially in the past two years, with almost no good news.
It has been successively involved in scandals such as the bankruptcy of financial company Greensill, Archegos Capital's liquidation, and providing money laundering assistance to criminal customers. It has hit one after another, suffered heavy reputation and suffered heavy losses, and has suffered losses for several consecutive quarters.
In 2021, Credit Suisse lost 1.65 billion Swiss francs, and lost another 1.86 billion Swiss francs, or about 13.4 billion RMB from January to June this year.
's weak business is ruthlessly eroding this systemically important financial institution - Credit Suisse was founded in 1856. It is the second largest bank in Switzerland and the fifth largest investment bank in the world, managing $1.62 trillion in assets.
Many people are worried that Credit Suisse's trouble is a sign of another global crisis.
In Yang Haiping's view, the hidden expectation psychological factors and market sentiment behind the bankruptcy rumors are worrying.
"The current global risk situation is indeed comparable to the eve of the crisis. The balance sheet vulnerability is intensified, the balance sheet constraints and extensive connections. In the case of relatively complex changes in macro liquidity, the market may find a risk lead, burning the market and causing large-scale risk contagion."
Yang Haiping believes that this lead may be an extreme situation of asset revaluation or a liquidity storage under panic, turning a problematic financial institution into the protagonist of the next Lehman moment.
" Credit Suisse has similarities with Lehman Brothers . As investment banks , they play an intermediary role in the interbank market, and bankruptcy will affect the stability of the entire financial system." Zhang Shengxing, visiting associate professor at Peking University HSBC Business School, explained, but he was more optimistic, believing that even if Credit Suisse goes bankrupt, he believes that the Swiss central bank can handle risky businesses and prevent them from being transmitted to other banks.
In fact, the Swiss National Bank has asked for help from Feder .
On October 5, it signed an currency swap agreement with it with more than US$3 billion; after it expired on October 13, the two sides reached a currency swap agreement of more than US$6 billion.
"With Lehman Brothers' past lessons, the Swiss National Bank is believed to be particularly cautious about the bankruptcy of investment banks."
Zhang Shengxing told the reporter of "21CBR" that the Credit Suisse crisis originated from its own scandals such as money laundering, and is more likely to be an isolated incident, which has little to do with the changes in the global macroeconomic .
He also admitted that uncertainty in the global economy is indeed increasing.
Reorganization and self-rescue
Get out of the darkest moment, Credit Suisse is putting its hopes on a veteran.
In July this year, 59-year-old Kornar became the CEO of Credit Suisse in a time of crisis. He has served in many important positions such as the head of the asset management department. He has been in charge of Credit Suisse for more than ten years and has acted decisively. Just a few weeks after taking office, Kornar quickly formed a new management team and invited the former Deutsche Bank CFO to join the company, who had been deeply involved in the restructuring plan of Deutsche Bank's business.
Credit Suisse’s focus of turning the decline is to reduce investment banking business and return to the main business of wealth management.
Credit Suisse once relied on investment banking business and continuously tilted resources, and it became the largest source of revenue .
is helpless, with strong expectations of economic recession, companies' willingness to issue stocks and bonds weakened, market is sluggish, and risk events are continuously exposed, investment banking business has become a "black hole" that swallows profits, losing 6.57 billion yuan in the first half of the year.
Management has conducted a strategic review of investment banking business, with the goal of shifting banking business to capital-light and consulting service orientation.
It is said that investment banking business will be "divided into three".
To relieve pressure, Kornar is significantly reducing costs. In the medium term, the absolute cost basis is expected to drop to below 15.5 billion Swiss francs .
It is reported that he will be reluctant to fire more than 10% of his employees, about 4,500 people.
It is worth noting that Credit Suisse's global disaster has not affected the pace of expanding its business in China.
In September this year, Credit Suisse just announced that it is preparing to take over the remaining 49% of the equity of "Credit Suisse Securities" from Founder for 1.14 billion yuan, with wholly owned the branch in China and a new general manager has been appointed.
Global executives of Credit Suisse have stated that they will focus on developing consulting, equity capital markets and stock trading businesses in the mainland.
In the first half of the year, the world's top three IPO market places were Shanghai, Shenzhen and Beijing, and China's counter-trend growth has been proven.
"If financing and other work can be successfully completed, Credit Suisse may take advantage of the restructuring and move its strategic focus from the United States. With the comparative advantages of emerging markets in the Asia-Pacific, there is a considerable probability that it can turn the world around." Chen Jia predicts that Credit Suisse may withdraw large amounts of investment banking business from the US market.
According to the plan, on October 27, Credit Suisse will update the progress of the comprehensive strategic review, and more detailed innovation measures will be disclosed at that time.
Yang Haiping believes that considering the current expectations and market sentiment, the future of this century-old financial institution is difficult to say optimistic.
