The likelihood of the Swiss-origin entity going technically bankrupt is even greater than in 2008, when Lehman Brothers fell.
The possibility of bankruptcy of Credit Suisse, one of the world’s largest investment banks of Swiss origin, is gradually becoming apparent. The best thermometer to check your mood is standard insurance (Credit Default Swaps -CDS-), which is used to cover the risks of credit default. And the entity’s CDS are skyrocketing, at their highest level above what was recorded in 2008, when Lehman Brothers fell.
It is precisely on that company that all eyes fall, warning of a possible collapse that will repeat itself 14 years later and that will shake the entire financial system in a context of crisis such as the current one. Rumors of a possible capital increase to address a deep restructuring of the company are resonating with increasing strength. The entity has more alternatives to finance the adjustment of its structure, but we will have to wait for the details of the presentation of the strategic plan, scheduled for the end of October.
Its shares hit a low of 3.54 francs on Monday, compared to 3.98 where they closed on Friday (-12%). After the mid-session, the share price rose slightly to 3.65 francs.
For Rafael Alonso, banking analyst at Bankinter: “Credit Suisse is going through a delicate moment due to the weakness of investment banking.” In addition, he considers several issues that have plagued the company in recent years: changes in the company’s management (three CEOs in one year) and extraordinary (losses by Allfunds in 2022 and Archegos and Greenshill in 2021). The price has fallen more than 55% so far this year, compared to Eurostoxx Banks’ 22%.
The market is concerned about the deterioration of management statistics. After the losses of 2021, Credit Suisse will record two negative quarters in 2022 and the consensus estimates a loss of 1,650 million Swiss francs for this year.
The current CEO, Ulrich Koerner, has admitted that the situation is critical, but has saved time by asking investors for a few months to comply with the bank’s new roadmap. The director has also sent a message of calm to his employees. But they will have to wait nearly a month for Credit Suisse to present its options for action on the 27th, including a radical turnaround in its investment banking and the possibility of the entity making thousands of layoffs in the coming years.
In recent years, the Swiss bank has suffered a series of financial scandals related to risk management, such as the Archegos hedge fund or loans to Greensill Capital.
In 2019, the bank was embroiled in a corporate espionage case, while last year the bank was fined in the UK and US for a bond scandal in Mozambique, the funds of which were used to bribe corrupt government officials in the country. pay ‘bribes’ to several former Credit Suisse bankers and other intermediaries.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
