Another Lehman brothers appears? This news has flooded the screen today.
According to China Securities Journal, recently, David Taylor, a business reporter under the Australian Broadcasting Corporation (ABC), reported according to reliable news that , a large investment bank is on the verge of bankruptcy . Some overseas self-media speculate that one of the may be Credit Suisse . In response, the person in charge of Credit Suisse responded that he refused to comment on the news. According to the latest report from the Financial Times, Credit Suisse executives guaranteed their liquidity and capital status to major customers, counterparties and investors last weekend.
Credit Suisse has been plagued by a series of scandals in recent years, including Archegos' liquidation, Greensill bankruptcy, and leaks, which have damaged the company's reputation and dragged down its performance. Its stock price has been in a slump since February last year, falling from $14.90 to $3.92 at the close of Friday.
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Centennial banking giant Credit Suisse is going bankrupt?
Credit Suisse executive: Don’t panic, there are still hundreds of billions of capital !
According to China Fund News, according to data from Bloomberg, the credit default swap index of Credit Suisse climbed to 250 basis points on Friday, approaching the level when Lehman Brothers went bankrupt in 2008, attracting market attention. CDS defaults swap higher the price, the greater the probability of default.
Market rumors are everywhere. In response, the person in charge of Credit Suisse responded that he declined to comment on the news. According to the Financial Times on Sunday, in order to appease investors, Credit Suisse executives reiterated their solid liquidity and capital status to major clients, counterparties and investors. Credit Suisse CEO Kornar told employees in a memorandum that The bank has nearly $100 billion of capital buffer and expects its highest-quality common equity Tier 1 capital ratio (CET1) to remain at 13%-14% for the rest of the year.
Credit Suisse will announce its latest strategy on October 27 to outline investment banking business plans, and is currently at a critical moment. Korner said that should not confuse its stock price performance with capital strength and liquidity.
Regarding this statement, netizens sarcastically said that when the global financial crisis in 2008 caused Lehman Brothers to go bankrupt, Lehman Brothers' CFO also said the same thing.
Previous media reported that Credit Suisse has formulated a plan to split its investment banking business into three parts, namely the consulting business, which may be divested at some time in the future; bad debt banks hold high-risk assets that will be gradually liquidated; and other businesses. Credit Suisse hopes to become a "capital light" investment bank focusing on wealth management and banking business again.
According to the proposal submitted to the bank's board of directors, Credit Suisse hopes to sell profitable departments such as securitization product business, hoping to avoid damage to financing capabilities. The securitization product business packages debts such as mortgages and then sells them as securities, which will reduce the bank's capital liabilities, but will also make it lose one of its most profitable businesses.
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For three consecutive quarters of losses, rumored to be insolvent
What has Credit Suisse experienced?
Credit Suisse is the second largest bank in Switzerland , with a history of 166 years. Credit Suisse has been in bad luck since 2021.
In 2021, Credit Suisse suffered a "double critical hit" of Archegos Century liquidation and Greensill collapse, causing the company to suffer billions of dollars in losses, forcing its investment banking supervisor and chief risk officer to leave. In addition, Credit Suisse was convicted in the lawsuit against for suspected helping drug dealers launder money, becoming the first large bank in Swiss history to be found guilty in a criminal case.
Archegos incident Bill Hwang is a Korean . He studied under hedge fund godfather Julian Robertson , and worked as a stock analyst in Tiger Fund founded by Julian. Archegos, a fund under Bill Hwang, has a net asset of approximately US$15 billion, plus 5-6 times leverage , with a total investment of approximately US$80 billion. Its heavy holdings include Viacom, Discovery, GSX, Tencent Music, Baidu , Wuxin Technology , etc. Then China rectified the extracurricular market, the delisting storm of Chinese stocks listed in , and the delisting storm of e-cigarettes, which successively hit Bill's holdings and caused Archegos to explode.
Archegos's liquidation not only cleared Bill's value and was imprisoned, but also lost $10 billion in the entire Wall Street . Credit Suisse suffered most of the losses, and lost $5.4 billion in the "giant thunder" of "the largest single-day loss in human history." Credit Suisse also admitted in its subsequent investigation report that before the liquidation, Archegos' bets on a series of stocks continued to expand, but some departments of Credit Suisse did not fully implement internal monitoring systems to track it. Credit Suisse's senior management even learned about Credit Suisse's exposure to the fund a few days before Archegos was forced to close.
Before Archegos's stock price fluctuated, Credit Suisse has doubled its pressure on the bankruptcy of supply chain finance company Greensill . After Greensill announced bankruptcy in March 2021, it closed its $10 billion supply chain finance fund holding Greensill bonds and rectified its asset management department. Credit Suisse previously stated that as of the end of 2021, it had submitted five insurance claims to Greensill, corresponding to Credit Suisse asset management risk exposure of approximately US$1.2 billion.
A series of scandals have brought huge turmoil to the bank, founded in 1856. The company's market value has evaporated billions of dollars and a large number of key employees have left.
In February this year, Credit Suisse was exposed to accepting more than 18,000 criminal customers including oligarch , drug dealers and human traffickers, and providing assistance to money laundering . According to foreign media quotes the investigation organization "Organized Crime and Corruption Reporting Project (OCCRP), Credit Suisse has more than 18,000 accounts holders of criminals, human rights violations or sanctioned persons, including Venezuelan officials involved in corruption scandals, Filipino population trading group and Balkan drug trafficking group leader Evelin Banev and several members. Immediately, Credit Suisse was prosecuted by the procuratorate for suspected helping drug dealers launder money. After four months of trial and trial, Credit Suisse became the first large bank in Swiss history to be found guilty in a criminal case.
Under multiple blows, Credit Suisse suffered losses for three consecutive quarters . In the fourth quarter of 2021, Credit Suisse lost before tax 1.6 billion Swiss francs ; in the first quarter of 2022, the company's net loss in the quarter .273 billion Hz ; in the second quarter of 2022, the company's net loss in the quarter was 1.59 billion Hz 2 francs, an increase of 482% month-on-month Hz 2 , far higher than the analyst's expected loss of 206 million.
There are even rumors that is already insolvent .
Data seen by the media showed that as of the end of June, Credit Suisse's high-quality current assets were approximately US$238 billion. The figure has not changed substantially since then, a person familiar with the matter said. According to Credit Suisse's second-quarter financial report, its leveraged risk exposure was approximately US$873 billion as of the end of June.
Investors' concerns about Credit Suisse's operating health are mainly focused on its leveraged financing investment portfolio. Credit Suisse said its leveraged financing portfolio totaled $5.9 billion as of June 30; another area of focus for investors is its securitization products division, which has a total exposure to mortgage bonds and asset financing of about $75 billion.
On July 27, 2022, Credit Suisse's second quarter financial report was released, and Credit Suisse urgently replaced the company and announced the appointment of Ulrich Krner, CEO of UBS Asset Management Department, as the group's CEO from August 1, 2022, and Gottstein, who has served for the company for 23 years, left office in disgrace. In addition, Credit Suisse has also announced that it is conducting a comprehensive strategic review, hoping to reduce the group's absolute cost base to below CHF 15.5 billion in the medium term.
However, even if there is the power of returning to heaven, it seems difficult to reverse.
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A bigger crisis?
Credit Suisse CEO has been meeting with major institutional investors who are worried that the company's financial foundation is unstable, and the CEO assured them that Credit Suisse has strong capital and liquidity. No matter how Credit Suisse's new CEO appeases the market and ensures that there is no problem with its own liquidity, the market seems to have recalled the situation before Lehman Brothers and Bear Stearns went bankrupt in 2008.
The famous CNBC anti-referential stock analyst Cramer also came out to support Credit Suisse...
Credit Suisse, the second largest bank in Switzerland, has a century-old history. Against the backdrop of the huge industrial bankruptcy of Europe, it has stormed its customers one step ahead of its customers, which is a heavy blow to the confidence of the entire Europe and even the world economy.
once successfully predicted the crisis in 2008. Mike Borui, a legendary figure who shorted subprime mortgage, analyzed the proportion of US stocks stocks falling below the 200-day moving average, and determined that it is now December 2007. Stamping is inevitable. The summer of bubbles in the US stock market is about to end, and the winter of flash collapse is about to appear.
Source | Caitongshe compiled from China Fund News, Wall Street News, Medici Effect, Daily Economic News and other
