Credit Suisse, which has been deeply involved in negative news recently, has once again fallen into bankruptcy rumors.
The rumor first came from a reporter from the Australian Broadcasting Corporation, who posted on social media that a large investment bank is on the verge of bankruptcy. As soon as the rumor of
came out, the market generally speculated that one of them might be Credit Suisse.
Because in the past two years, Credit Suisse has been plagued with negative news.
, including Credit Suisse, also fell from US$14.8 to the lowest level of US$3.83, which is also a continuous halving trend.
Although the trend of US stocks this year is relatively bad, many large investment banks and banks generally have a decline of around 35%. There are still relatively few people like Credit Suisse who have made continuous halving trends.
There must be something wrong with things. The capital market is the most sensitive. Credit Suisse has certainly had some problems behind this collapse trend.
For example, Credit Suisse's credit default swap index has climbed to 250 basis points on September 30. The higher the credit default swap index, the greater the possibility of debt default.
Before Lehman Brothers went bankrupt in 2008, the credit default swap index rose above 250 basis points.
So, this indicator also shows that Credit Suisse's current debt risk is very high.
Faced with various bankruptcy rumors from the outside world, Credit Suisse naturally wants to come out to appease investors.
Credits CEO told employees in the memorandum that Credit Suisse now has nearly $100 billion in capital buffer .
In addition, he also said, "Don't confuse its stock price performance with capital strength and liquidity."
But what is embarrassing is that foreign netizens soon discovered that Lehman Brothers had said similar things before they went bankrupt in 2008.
Credit Suisse is a century-old investment bank. It was once the fifth largest consortium in the world and the second largest bank in Switzerland .
Credit Suisse's total assets reached US$435 billion at the most, and the peak of its market value was in 2007, reaching US$100 billion.
But with the outbreak of the subprime mortgage crisis in 2008, Credit Suisse also began to decline.
However, by last year, there was still a market value of more than 30 billion US dollars, but now there is only a market value of 10 billion US dollars.
Credits News has been in full swing in the past two years.
includes Archegos' liquidation, Greensill bankruptcy, leaks, etc.
. I also analyzed Archegos' liquidation in this century. This matter has some relationship with Chinese stocks listed in .
On March 24 last year, Chinese stocks that have repeatedly hit record highs and have continued to double the trend suddenly experienced huge long negative numbers.
Take a certain Chinese stock listed as an example. On March 24 last year, it plummeted by 27% in a single day.
Looking back now, March 24 last year was also the starting point of this wave of stock market crash where Chinese stocks generally fell by more than 80%.
htmlOn March 24, the US SEC passed the final amendment to the " Foreign Company Accountability Act ", which was the direct fuse that led to the bloody blow of Chinese stocks listed in the United States.
With the general plummeting of Chinese stocks, many funds with heavy holdings in Chinese stocks have also suffered heavy losses.
The biggest loss was a Korean.
The Korean is called Bill Hwang. He is also a relatively famous fund manager. He used to be the founder of Asian Funds of Tiger Securities .
In 2010, Bill Hwang was banned from trading on Hong Kong stock for suspected insider trading.
Later, Bill Hwang switched to the US stock market in 2012 and founded his own fund with $200 million of his own funds. In just 8 years, Bill Hwang expanded its scale to $15 billion.
Bill Hwang is an aggressive leverage enthusiast. He usually uses five times leverage to operate normally, that is, the 15 billion US dollars fund he manages, which affects US$75 billion in market funds. It is already a relatively large fund.
However, Xiao He failed Xiao He.
Bill Hwang accumulated a lot of wealth through leverage, but he also lost all his money because of leverage.
Originally, Bill Hwang had a 200% return this year due to high leverage operation. But he did not choose to make a profit by putting the money in order to make a profit, but chose to continue to operate with high leverage.
Before the liquidation, the total size of the Archegos fund managed by Bill Hwang expanded from US$10 billion to a high of US$160 billion.
Results Many of his heavily held stocks are Chinese stocks listed in the US.
As Chinese stocks generally plummeted by more than 40% in just one week, Bill Hwang also lost his position, resulting in the Archegos Fund's $15 billion position being forced to set, which is called "the largest single-day loss in human history."
This is just the loss of Archegos Fund itself. Due to the high leverage operation, the actual losses of the relevant investment banks were as high as US$80 billion due to the Archegos Fund's liquidation at that time.
. Large investment banks including Credit Suisse, Morgan Stanley and Nomura Holdings have suffered losses of more than 10 billion US dollars. Among them, Nomura lost $2 billion and Credit Suisse lost $5.4 billion.
Credit Suisse suffered heavy losses last year because of this incident, and it was also one of the many straws that broke Credit Suisse.
Credit Suisse has also sold Greensill's supply chain financial products to investors. Last year, Greensill filed for bankruptcy in London, so Credit Suisse needs to return at least $5.9 billion to relevant investors.
can be said to be The house is leaking and raining all night .
Last year, many people suffered tens of billions of dollars in losses due to these two scandals in Credit Suisse, and expressed concern about Credit Suisse's prospects.
Last year, the Federal Reserve was still in a state of great easing, and Credit Suisse can still support it.
However, this year, with the Federal Reserve's radical hike of interest rates, global currencies have turned sharply, and the US dollar system funding out of Credit Suisse has tightened significantly, which is a step further for investment banks like Credit Suisse, which has a greater debt pressure.
And this year, due to the huge fluctuations in the global financial environment, especially the foreign exchange market, the major currencies in the world have depreciated significantly, and many people have lost their positions because of this.
If the investment bank's risk control is not done properly, Credit Suisse did not promptly close the Archegos fund in time, resulting in Archegos fund being cut into , causing Credit Suisse to suffer huge losses as a result.
In fact, on March 24 last year, when Chinese stocks first plummeted, many major investment banks were keenly feeling the risk of Archegos fund liquidation.
Archegos Fund is not just working with Credit Suisse, but also Morgan Stanley and Goldman Sachs.
But Goldman Sachs and Morgan Stanley both forced the Archegos fund to close their positions as soon as possible, lifted their positions, and stopped losses in time, so the losses of these two companies were not large.
, and Credit Suisse suffered the biggest loss in the end because it was delayed.
There are also some rumors this year, that some foreign exchange trading customers have also experienced positions, and the investment bank where they are located will face losses.
The so-called crossing of positions means that normally leveraged trading of has a forced closing line. If the market fluctuations exceed the closing line level, then securities investment banks will force closing positions on customers to ensure that the investment banks themselves do not lose money.
For example, if your principal is only 100 million, you use 10 times leverage, that is, if you use 1 billion to go long, if the market drops by more than 10%, then you will lose 100 million, which is equivalent to losing the principal. At this time, the investment bank will force the position to close, and you will lose all your money.
But sometimes, the market fluctuations are too huge. For example, on March 24 last year, Chinese stocks plummeted by more than 20% in a single day, and investment banks did not have time to force their positions due to slow reaction.
Then you will lose 200 million, but your principal is only 100 million. The extra 100 million is the loss of the investment bank.
Normally, after the position is broken, the investment bank will ask the customer to add margin to get the additional 100 million losses, which means that your principal will not only be lost, but also owes the investment bank 100 million.
However, after normal customers break through positions, they go bankrupt directly, so the investment bank has no need to ask for it. In the end, the cost of breaking through positions will be set aside by the bank to losses.
The global financial market has fluctuated greatly this year, especially the foreign exchange market. For example, the British pound saw a single-day plunge of 5%.
Because the foreign exchange market fluctuates very little, it is often leveraged for hundreds of times. There is such a pin-in market that plummets by 5% in a single day. I don’t know how many people will break their positions.
This will cause many investment banks to fall into greater risks.
Moreover, with the Fed's aggressive interest rate hike, the global monetary environment has suddenly tightened, which will also cause investment banks like Credit Suisse, which have greater debt pressure and are usually poorly managed, so there will be major problems.
So, it is not surprising that Credit Suisse has any problems in the current environment.
The more critical question now is, will Credit Suisse be the last big investment bank to have problems?
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