2023-03-20 22:29:56

clap of thunder! Credit Suisse fell into Ruixing?

"Is my money okay?"

Rich people in Europe and the world

Panic critical hit

Because top investment bank Credit Suisse

(Not that Ruixing Coffee)

It boasted that it had an accident

Wednesday night Beijing time may be a nightmare for European and American investors. The European market, which had been bullish for some time, saw a nonresistant sell-off on Wednesday.

Storm Eye Credit Suisse, which was once down 30% in the Swiss market. Credit Suisse, which was listed on the US market, also fell nearly 30%, and its market value was once close to that of Ruixing Coffee. So, in the evening, a joke spread: Ruixing's market value is almost catching up with Credit Suisse, and the day Credit Suisse helped Ruixing make its IPO, it must have been unexpected!

Previously, Credit Suisse's one-year credit default swap (CDS) was close to 1000 basis points. In the credit market, one-year priority bank CDS spreads exceeding 1000 basis points are extremely rare. During the Greek debt crisis and economic recession, the CDS of major Greek banks was at a similar level.

Fuse: Credit Suisse, the European Centennial Bank, has revealed itself!

On March 14 US time and March 15 Beijing time, the US Securities Regulatory Commission (SEC) sent a letter of inquiry to Credit Suisse. Anyone who speculates in stocks or has concerns about the stock market knows that this is a routine, with standard procedures and answers. No problem, I'm fine. I'm fine. Please rest assured.

But this time Credit Suisse is not taking the usual path, and the response to the SEC is that we have a problem! (This operation?) and voluntarily disclosed the audit report in the company, but the auditor issued a negative opinion.

The more awkward explanation is: (Can't understand, skip the next paragraph) Credit Suisse said that the bank found "material weaknesses" in its internal control over financial reporting in 2021 and 2022, and the auditor, PricewaterhouseCoopers, gave a negative opinion.

The market was shocked by this remark! Unless it is true to that point, no one is willing to actually issue such a report that offends the financier. It can be said that issuing a negative report on an audit is indeed the biggest negative evaluation of the audited company that the auditor has no choice but to make.

Who is Credit Suisse? How important is it?

Founded in 1856 with a history of 167 years, Credit Suisse is headquartered in Zurich, Switzerland. It is the fifth largest consortium in the world and the second largest bank in Switzerland. In 2022, he was selected into the Fortune Global 500 ranking and ranked 494th.

According to public information, in 2022, Credit Suisse's total assets were 3.97 trillion yuan, and its total liabilities were 3.63 trillion yuan, including deposits of 1.74 trillion yuan.

As a top international investment bank in the world, Credit Suisse's business covers Europe, North America, and Asia, with 70% of its business located abroad. If it fails, its destructive power will far exceed that of Silicon Valley banks (we have previously reported that bankrupt Silicon Valley banks only rank 16th in the United States, while Credit Suisse is Switzerland's second largest bank). It may even affect Switzerland's national credit, which can form a domino effect.

The house leaks and it rains at night

Major shareholders refused to inject capital

According to local media reports quoted by CCTV News, the Saudi National Bank, one of the largest and most important shareholders of Credit Suisse, previously announced that it would rule out the possibility of further capital injections into Credit Suisse. In an interview, the Chairman of Saudi National Bank stated that it would never provide further liquidity support to Credit Suisse.

Last October, the Saudi National Bank purchased a 9.9% stake in Credit Suisse for 1.4 billion Swiss francs, which was part of Credit Suisse's $4.2 billion financing at the time. However, the 1.4 billion Swiss francs investment of the Saudi National Bank evaporated 500 million Swiss francs in just a few months after it became a shareholder.

The Swiss Central Bank said

Credit Suisse

[P] will be supported when necessary. "After being ruthlessly rejected by the father of the largest financier, Credit Suisse urgently issued a request for help to the Swiss Central Bank.".

In order to avoid systemic risks to the financial system, late Wednesday, the Swiss Central Bank and Swiss regulator Finma issued a joint statement in support of Credit Suisse on market uncertainty, saying they would provide liquidity if necessary. According to the latest news, the Swiss Central Bank will provide up to 50 billion Swiss francs to Credit Suisse.

Regarding market concerns, Credit Suisse Chairman Rehman said on Wednesday that the bank's capital adequacy ratio and balance sheet were strong. He also added that it is inaccurate to compare the current problems faced by Credit Suisse to the recent collapse of banks in Silicon Valley. Credit Suisse CEO Crayle also stated on the same day that the bank's liquidity base is "very, very strong", "we basically meet and exceed all regulatory requirements."

Over the years, Credit Suisse has been one of the most problematic banks in the European banking industry.

This 167 year old bank, which provides wealth management services for the wealthy and engages in investment banking on Wall Street, has been hit hard by repeated scandals and financial losses, including fund exposure, plummeting performance, drug trafficking, money laundering, and so on.

As a result, client funds continue to flee. According to data, customer outflows exceeded 110 billion Swiss francs in the fourth quarter alone. In its latest annual report, Credit Suisse admitted that the outflow of funds had not reversed.

Will it trigger the next "Lehman moment"?

According to reports on Wall Street, Nuril Roubini, an extremely pessimistic economist and known as "Dr. Doomsday", believes that the problem with Credit Suisse will lead to the next "Lehman moment":

"By some standards, Credit Suisse may belong to a bank that is too big to fail, but the problem is that it may also be too big to rescue.".

After the largest investor, the Saudi National Bank, ruled out the possibility of increasing its stake, Roubini said that Credit Suisse faced the risk of bankruptcy. "The question is whether they can get a capital injection. If not, there may be an accident.".

Dr. Doomsday is not the only person who holds this view.

Robert Kiyosaki, the author of "Poor Dad, Rich Dad" and a Wall Street entrepreneur who accurately predicted the bankruptcy of Lehman Brothers in 2008, believes in a program that the next bank that will encounter bankruptcy may be Credit Suisse.

The problem lies in the bond market. Just as I predicted the collapse of Lehman Brothers years ago, I think the next bank to fail is Credit Suisse.

Just hours after Kiyosaki's prediction, Credit Suisse admitted that there were "substantial deficiencies" in its reporting and control procedures over the past two years.

"Investors have lost confidence"

Employees from Credit Suisse in London and Hong Kong have respectively disclosed to First Financial reporters that the company's internal operations are still as usual and there are no abnormalities.

A British asset management industry person with whom his organization has business dealings with Credit Suisse said that despite the severe situation, the statement that "Credit Suisse may fail" was too exaggerated; However, Credit Suisse's balance sheet is not bad, but the key point is that "investors have lost confidence.".

Will post financial crisis rules not work?

After the 2008 financial crisis, regulators around the world have introduced stricter restrictions, especially for banks that are important to the global financial system. Most central banks and national regulators have launched annual stress tests to check whether banks can still support customers in times of severe economic shocks and market turbulence.

In the worst case scenario, systemically important banks should have sufficient capital and so-called "living wills" to ensure that they can fail in a relatively orderly manner. However, these "living wills" have not yet been tested by real bank failures.

Now, with the emergence of the Credit Suisse crisis

Fear is once again enveloping the market

People are worried about a repeat of past crises

In particular, the impact on the financial system and the global economy

Who will be the next bank to fall?

Shanghai News Broadcasting is a comprehensive collection of news from CCTV News, Cailian News, Daily Economic News, First Financial News, Wall Street News, etc.

Editor: Yan Ping

Editor in charge: Shen Yingjie