Reporter of the Economic Business: Zhang Lingxiao Reporter of the Economic Business Business: Gao Han
On October 1, local time, David Taylor, a business reporter under ABC (ABC), claimed that according to reliable information, a large international investment bank is on the verge of collapse.
Image source: David Taylor Social Media Screenshot
This news has caused concerns about the financial situation of Credit Suisse Group (CSX1, 3.8 euro , 10.603 billion euro ). The share price of Credit Suisse fell by more than 10% in the early trading session of October 3 in Europe.
Regarding bankruptcy-related news, according to the " Financial Times " report on October 2, Credit Suisse told employees in a briefing on Sunday: "Credit Suisse has strong capital and cash flow and balance sheet, and the current stock price performance cannot change this."
It is reported that Credit Suisse executives reiterated its solid liquidity and capital status to major customers, counterparties and investors over the weekend. Credit Suisse CEO Ulrich Körner 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% to 14% for the rest of the year.
However, Credit Suisse's performance does worry investors. As of press time, Credit Suisse's U.S. stock price has fallen by about 60% so far this year.
Image source: Google Finance
In addition, according to data from S&P Global Market Finance, Credit Suisse's Credit Default Swap (CDS) index soared 50 basis points in the past two weeks and reached 250 basis points on Friday, the highest level in at least a decade, approaching the level when Lehman Brothers went bankrupt in 2008. At the beginning of the year, Credit Suisse's credit default swap index was only 57 basis points. The higher the CDS default swap index, the greater the probability of default.
The Financial Times said that the board of directors of Credit Suisse will announce its business restructuring plan on October 27 to alleviate investors' concerns and also announce its third-quarter results. According to CNBC, Körner said in a memorandum that his stock price performance should not be confused with capital strength and liquidity.
Some 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.
Last month, the Financial Times quoted people familiar with the matter as saying that Credit Suisse had formulated plans to split its investment banking business into three parts and re-activate a "bad bank" to manage risky assets.
According to the latest proposal under consideration, investment banking business will be split into three parts: consulting business, which may be divested at some point in the future; bad debt banks, holding high-risk assets that will be gradually liquidated; and the rest of the business.
Deutsche Bank analysts Benjamin Goy and Sharath Kumar Ramanathan once predicted that Credit Suisse would face a funding gap of at least 4 billion Swiss francs to improve its financial strength, provide funds for restructuring and support growth.
Körner is considering helping the in-depth reform of the investment banking sector by attracting third-party capital for securitized products. Deutsche Bank analysts Benjamin Goy and Sharath Kumar Ramanathan believe: "Enhanced capital and restructuring financing require pre-investment of capital. In our opinion, there are some execution risks in the sales of securitized products."
In recent years, Credit Suisse has been hit by spy scandals, investment fund closure, record trading losses and a series of lawsuits, making the bank gradually distant from the dream of first-tier investment banks on Wall Street . Archegos alone caused Credit Suisse to suffer a loss of US$5.1 billion. Credit Suisse was also downgraded by analysts last month by a series of ratings, which increased its borrowing costs.
Daily Economic News
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-