Friday, December 1, 2023

An expert has said that Credit Suisse is at risk of becoming the next big bank to fail, because it’s not doing well financially. Also, problems in their record-keeping have been noticed. On Wednesday, their stock prices went down after they could not get enough money from its biggest supporter.

The Fall of Credit Suisse

Greg Foss, a market strategist, recently said on the Coin Stories podcast that Credit Suisse, a very big Swiss bank, might soon collapse, just like Silicon Valley Bank and Signature Bank which have already crumbled.

Foss is the head of Validus Power Corp. Before that, he was a shareholder for 3iQ Corp. and worked as a manager for credit investments at Fiera Quantum, GMP Investment Management, and Marret Asset Management. He also used to be the Vice President (VP) of Fixed Income Trading at TD Securities.

Foss said that Credit Suisse is a big financial company and many people are taking their money away from it. This means that the bank won’t make as much money as before and it’s like a lot of people suddenly running out of the bank.

Credit Suisse is one of the 30 special banks that the Financial Stability Board (FSB), along with the Basel Committee on Banking Supervision and some other important people, say are really important. Other major banks who are also considered really significant include JPMorgan Chase, Bank of America, Citigroup, HSBC and Goldman Sachs.

Someone suggested that if something bad happens to Credit Suisse First Boston (CSFB), it won’t just affect them but also other businesses that have connections with CSFB or provide business services for them. Back in 1988, Credit Suisse bought out First Boston which was a big investment bank at the time. On the question why CSFB will probably be the next large bank to fail, Foss gave this explanation.

The strategist said that the second biggest bank in Switzerland claimed they met all the standards set by the Bank of International Settlements, but he pointed out that these standards do not take into account how much would be needed to pay everybody back if something went wrong. This means that even though this bank has assets worth a trillion dollars, its market value – or what it’s worth – is only 10 billion dollars, which is pretty low.

The value of Credit Suisse’s stocks went down suddenly on Wednesday. This happened because its biggest investor, Saudi National Bank, said that it cannot give the bank extra money. The reason is that the government has a rule saying they are not allowed to spend more than 10% of their funds on this.

Credit Suisse released its financial report for 2022 this Tuesday. According to the report, Credit Suisse stated that it had found some problems in their procedures for checking accuracy of their financial statements. The bank’s management staff did not strictly follow a process to recognize and evaluate mistakes which could have been made while recording the financial information.

As of now, the Credit Suisse Group stock traded is lower than other days at only $1.92. It has gone down a lot to 97% below its highest price. Will it keep dropping as Greg Foss (a market strategist) predicted? Let us know and share your opinion in the comment section!


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