The bank group Credit Suisse, which has a 166-year history, has been rumored to have a financial crisis. Even if a series of reforms are carried out, there may still be a gap of US$4 billion. For some time, the market has been worried that Credit Suisse will be the next Lehman Brothers ?
Credit Suisse, which is in operational dilemma, is also actively saving itself. Recently, it announced that it would use cash to buy back US$3 billion in debt to save interest expenses, and to demonstrate its financial strength and try to send a positive signal to the market.
3 cash repurchase of US$3 billion in debt. Will Credit Suisse be the next Lehman Brothers?
Credit Suisse
Credit Suisse is the second largest bank in Switzerland . Recently, due to the capital and liquidity crisis, it has instantly become a hot topic of discussion in the global financial market. Many people are worried that the financial crisis caused by the bankruptcy of Lehman Brothers in the past will be staged again?
The UK " Financial Times " reported on October 3 that there is a rumor in the market that Credit Suisse Group is facing a financial crisis. Later, Credit Suisse revealed to Taiwanese media that the media speculated that the liquidity problem of Credit Suisse Group was completely untrue. The group has strong capital, stable finances and sufficient liquidity, and is in an advantageous position compared with its industry peers.
The Financial Times reported on October 3 that senior executives of Credit Suisse, the second largest bank in Switzerland, called major customers, counterparties and investors over the weekend to appease their concerns about the company's liquidity and capital positions. On September 30, Credit Suisse's credit default exchange (CDS) price spread rose sharply, highlighting the market's worries. CDS is usually regarded as an indicator of debt repayment ability. The higher the basis point, the weaker the company's ability to repay debts.
In order to show financial strength, eliminate market worries, and to alleviate the decline in stock prices, Credit Suisse, which is in operational difficulties, announced on October 7 that it will buy back the senior bond for about US$3 billion in cash to save interest expenses. As soon as the news came out, Credit Suisse's stock price rebounded by 6.5%.
At the same time, Credit Suisse also confirmed that it will sell the Savoy Hotel in Zurich's financial district, which also triggered speculation that the second largest bank in Switzerland is actively improving liquidity.
Credit Suisse
Credit Suisse announced last Friday (October 7), and the insurance cost of the bank's debt issuance fell. According to market intelligence from S&P Global , Credit Suisse's five-year credit default exchange (CDS) fell 42 basis points last Friday from 308 basis points last Thursday. In addition to the stock price rebound, bond prices calculated in euros also rose, which made market investors feel relieved.
Credit Suisse CEO Ulrich Koerner also told his employees in the letter that the group has sufficient capital and liquidity. But as social platforms are filled with a large number of unconfirmed rumors and rumors, Credit Suisse can only use actions to regain market confidence and reduce debt by repurchasing $3 billion in bonds, which is also to boost market confidence.
" leaks and rains all night long ", and while Credit Suisse is actively trying to save itself, the famous credit review agency Moody's slashed hard. The agency predicts that Credit Suisse will increase its losses to $3 billion by the end of this year, and the core capital ratio may be below the key level of 13%.
On October 6, Andrea Maechler, a member of the SNB Governance Committee of the Swiss National Bank, told Reuters that they are paying close attention to the situation of Credit Suisse.
Caotai Financial Holding General Manager Li Changgeng
Credit Suisse is rumored to be in financial crisis, and the " butterfly effect " has also expanded to all parts of the world, such as Taiwan's island.Li Changgeng, general manager of Cathay Financial Holdings, revealed that Cathay Financial Holdings subsidiary Cathay Life Insurance holds approximately NT$435 billion in Credit Suisse bonds. Since Credit Suisse CDS has soared by 250 basis points, it is necessary to reduce losses in accordance with financial standards.
However, Li Changgeng said that he does not want the Lehman incident to come back as the media said, because this is not only for Credit Suisse, but also has a great impact on the world. But he also emphasized that although Credit Suisse's assets are larger than Lehman Brothers, Credit Suisse's impact will be smaller than that in 2008 and 2009.
Li Changgeng analyzed that there are two main observations: First, after 2008, the global central bank cooperation mechanism was much stronger than that year; second, such a big problem would occur at that time, that many AIA's financial assets and the upstream and downstream counterparties network did not know the situation.
At present, the amount of funds invested in Taiwan's island in Credit Suisse has been exposed to be about NT$600 million, which has a drop in the impact on Taiwan's financial industry. In contrast, in the past 10 years, the amount of "Treasure Island Bonds" issued by Credit Suisse in Taiwan has reached NT$64.87 billion. Once Credit Suisse becomes "Lehman Brothers second", it will have a greater impact on the island's financial industry.
In addition to Cathay Financial Holdings, such as Fubon Financial Holdings and island financial institutions such as Fubon Life Insurance, Taishou and Beifuyin under CITIC Financial Holdings, all hold Credit Suisse bonds with different positions. Each company is currently cautiously evaluating the changes in the situation and the possible impact.
166 Credit Suisse?
Former Chairman of Credit Suisse Bank Horta-Osorio
Since this year, Credit Suisse has been in constant turmoil, one after another. Many people will ask: What's wrong with Credit Suisse, which was established in 166?
In January this year, Antonio Horta-Osorio resigned as chairman of Credit Suisse Bank for violating COVID-19 isolation regulations. This person took office for only 8 months. Credit Suisse announced that it will appoint group director Axel P. Lehmann as the new chairman of Credit Suisse.
Hotah-Wusoli was previously invited to clear Credit Suisse's corporate culture and appeared as a reformer. Credit Suisse was previously forced to close its holdings due to the influence of the US hedging fund Archegos Capital Management, and was also affected by the bankruptcy of British financial company Greensill, which hit Credit Suisse a huge blow.
Hotta-Wusorry has not yet taken the reform move. Reuters reported in December 2021 that an internal investigation by Credit Suisse found that he did not comply with the relevant regulations on British quarantine and went to London to watch the Wimbledon championship in July last year. The Portuguese banker also went out without authorization during his 10-day quarantine in Switzerland in November last year.
Credit Suisse Chairman Axel Lehmann
Axel Lehmann, who was designated as the chairman of Credit Suisse in January this year, said he would maintain the reform route at the beginning of his tenure.
Lymann previously worked at Credit Suisse's largest competitor, UBS, Switzerland's largest bank. Earlier, he served in Zurich insurance company for about 20 years. Many people are also looking forward to Lehman's chance to let Credit Suisse, which has a 166-year history, "old trees sprout new buds" and rejuvenate?
Credit Suisse lost 1.65 billion Swiss francs in 2021, and its stock price was also sluggish. The continuous decline in stock prices certainly reflects a series of scandals that have occurred in the second largest bank in Switzerland since last year, and the core reason behind the scandal is the lack of corporate governance and the inadequate operating performance.
After May this year, major international credit evaluation agencies have lowered Credit Suisse's credit evaluation. For example, Fitch suddenly lowered Credit Suisse from A- to BBB+, and S&P is even more ruthless, reducing Credit Suisse BBB+ to BBB.
In addition to operating losses, Credit Suisse is also plagued by lawsuits and has encountered problems such as senior executive resignation.
Credit Suisse
Credit Suisse is an internationally renowned financial institution. In the past, it was known for its stable operations. Now there is a problem. Even if there will be no subprime mortgage storm or Lehman 2.0 replica, there are many crises hidden under the surface of operating losses.
From the general environment, the sharp appreciation of the US dollar plus Feder rate hike has caused undercurrents in the international financial market, and various fatal crises are hidden under the table. Market turmoil will expose hidden problems in holding assets. If the company's supervisor turns a blind eye, the problem will sooner or later be exposed.
It is worth mentioning that the Credit Suisse leak incident at the end of February this year has even made Credit Suisse in a lawsuit. Credit Suisse leaked the account information of 30,000 bank customers to international media, including sensitive people such as well-known heads of state, intelligence officials, sanctioned businessmen, and high-risk customers involved in crimes such as money laundering and fraud. This move not only made the Swiss banking industry rigorously protect the traditional image of customers, but also damaged the company's credibility.
In addition, Credit Suisse has also neglected the importance of "knowing customers" (KYC) basic risk control requirements. In March 2021, the family fund Archegos Capital suffered a "deadhead" due to the failure of stock investment leverage operations, resulting in the inability to perform margin recovery, which dragged Credit Suisse to lose nearly US$4.7 billion.
Also, the bankruptcy case of Greensill, a corporate short-term supply chain financing company that broke out in early March last year, also caused Credit Suisse to face a loss of US$3 billion. It has previously exposed the crux of Credit Suisse's improper sales.
Credit Suisse predecessor, Chairman of the Board of Directors of SKA, Alfred Escher
Credit Suisse predecessor, Schweizersche Kreditanstalt (SKA), was originally named the German Credit Suisse structure. It was founded on July 16, 1856 and was founded in Zurich, Switzerland.
Credit Suisse's first SKA board of directors was Alfred Escher. Since 166, Credit Suisse has developed from a Swiss investment bank to a global leading financial institution and the second largest banking group in Switzerland, with its business involving investment banking, , wealth management and asset management.
Credit Suisse's registered shares are listed on Swiss Stock Exchange , and are also traded on New York Stock Exchange through American Deposit Securities (CS).
"Big to the point of failure" is a famous saying in the financial industry. The bigger the bank's influence, the deeper the level, and when it is serious, it can shake a country's economy. For example, Swiss Bank and Credit Suisse are the first and second largest banks in Switzerland, with businesses all over the world. More than ten years ago, its losses once exceeded Swiss GDP six times. At this time, if there is a gap, even if the Swiss government is willing to rescue it, it will be unable to save it even if it is anxious.
For several years, many financial institutions, including Credit Suisse, have been repeatedly "cut off" by the United States. For example, in December 2016, Credit Suisse accepted the defeat with Deutsche Bank and was willing to pay a sky-high fine issued by the US Department of Justice. Among them, Credit Suisse finally paid a fine of US$5 billion to US$7 billion after several negotiations with the United States. In April 2017, Credit Suisse was raided and searched by Netherlands , the United Kingdom, Germany, France and Australia for suspected assistance to customers to evade taxes and launder money.
In September 2020, Swiss media reported that Axel Weber, chairman of the Swiss Bank (USB), said that he was considering merging with Credit Suisse, giving birth to the largest bank in Europe, but after today, no substantial results have been seen.
The above gives a few examples, which are just Credit Suisse, which has a history of 166 years, has only had a small storm over the long years. But no matter what, whether the Russian-Ukrainian conflict, the appreciation of the US dollar, the UK financial fluctuation, and Credit Suisse will be linked to the 2022 financial version of Black Swan Event , remains to be seen. No matter what, Chinese companies should prepare for the future and be prepared to resist various risks and challenges.
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