Centennial Investment Bank Credit Suisse
Centennial Investment Bank Credit Suisse (hereinafter referred to as " Credit Suisse ") has been rumored to have the possibility of bankruptcy.
Recently, social media reported that , a large investment bank, was on the verge of bankruptcy, and market speculation pointed to Credit Suisse. The investment bank has been in trouble recently, and its shares have hit record lows.
On October 3, Credit Suisse US stocks fell 7% before the market, fell 5.6% after the opening of , the stock price hit a record low of $3.7, turned up at midday and closed up 2.3% to close at $4.01. Since the beginning of this year, Credit Suisse The stock price fell 57.75%.
Short sellers of also added to the pressure on Credit Suisse. Short positions in the bank's shares rose by 25.4 million shares, or 51%, over the past week, according to data analytics firm S3 Partners.
still have 100 billion capital ?
Bloomberg reports that the cost of insuring Credit Suisse's debt against default has soared, according to ICE Data Services. Credit Suisse's five-year credit default swap spread (CDS, Credit Default Swap) was as high as 293 basis points, and the default risk was high, hitting an all-time high. Credit Suisse sent a memo to employees last week and made a series of calls to investors and clients in an attempt to ease its "health situation," according to , , citing people familiar with the matter. 's concerns.
"There will be more noise from the market and the media between now and the end of October, I hope you all stay disciplined and keep in touch with clients and colleagues. There are many inaccurate representations of outside sources. That said, don't take our day-to-day share price performance Confused with the bank's strong capital base and liquidity position," Credit Suisse Chief Executive Ulrich Korner wrote in the memo. In the memo, Korner told employees that the bank was at a critical juncture and would disclose an update outlining its strategic review plan on Oct. 27, Reuters reported. Koerner noted that the company currently has a strong capital base and liquidity position, with a capital buffer of nearly $100 billion, and expects its highest-quality common equity tier 1 capital ratio (CET1) for the remainder of the year will remain at 13% to 14%.
On October 3, Ulrich Koerner reiterated the content of his memo last Friday on social platforms.
has quite a few market views comparing Credit Suisse to the bankrupt Lehman Brothers , but it may not be that bad.
reported that as of the end of June, Credit Suisse had about $238 billion in high-quality liquid assets, and according to sources, this figure has not changed substantially since then. Credit Suisse’s second-quarter earnings report showed that as of the end of June, the bank’s leveraged exposure was about $873 billion.
JPMorgan analysts said in a research note that they view Credit Suisse's capital and liquidity as "healthy" based on its financials at the end of the second quarter. Analysts said that while Credit Suisse's CDS spreads widened, this should be seen against the backdrop of widening credit spreads across the industry, which is expected in an environment of rising interest rates and continued macroeconomic uncertainty.
"Darkest Hour"
Founded in 1856 and headquartered in Suez, Switzerland, Credit Suisse is a global integrated financial institution. It had more than 50,000 employees and $1.62 trillion in assets under management at the end of 2021. However, this established bank with a history of more than 160 years has recently encountered a "dark moment", which has been affected to a large extent from performance to brand reputation.
In March 2021, Archegos Capital, the family investment fund operated by Bill Hwang, the manager of hedge fund in South Korea, recorded the "largest one-day loss in human history", and Credit Suisse, which cooperated with Archegos, suffered a huge loss of 54% One hundred million U.S. dollars.
With the collapse of Archegos Capital, and another important Credit Suisse client, Greensill Capital's bankruptcy made this well-known financial group accumulated more than 20 billion US dollars of risk exposure and fell into crisis. The
liquidation storm also triggered a “reshuffle” of Credit Suisse’s management. Credit Suisse Investment Bank Chief Executive Officer (CEO) Brian Chin and Chief Risk Officer (CRO) Lara Warner both resigned, and Credit Suisse Chairman Urs Rohner also resigned at the end of April 2021.
made matters worse when, in June, Credit Suisse was convicted in a lawsuit allegedly helping drug dealers launder money, becoming the first major bank in Swiss history to be convicted in a criminal case.
Credit Suisse was revealed to accept more than 18,000 criminal clients, including oligarchs , drug dealers and human traffickers, and to help with money laundering. The Swiss Federal Criminal Court fined Credit Suisse about $2.1 million and ordered Credit Suisse to pay the Swiss government about $20 million. In a statement, Credit Suisse "strongly denied" the allegations of its business practices and said it would appeal the verdict.
short sellers also added to the pressure on Credit Suisse. Short positions in the bank's shares rose by 25.4 million shares, or 51%, over the past week, according to data analytics firm S3 Partners. This includes the bank's common shares listed on Zurich and its US-listed American Depositary Receipts (ADR). That equates to 2.84% of Credit Suisse's outstanding shares, up from 1.87% last week, according to
. The total short stake was about $300 million, up from $200 million in the same period.
actively help themselves
However, Credit Suisse has begun to help itself.
Just in September, news broke that Credit Suisse had drawn up plans to split its investment banking business into three parts and re-launch a "bad bank" to run risky assets.
Under the latest proposal under consideration, 's investment banking business, , will be split into three segments: an advisory business, which may be divested at some point in the future; a bad bank, which holds high-risk assets that will be gradually liquidated; and the rest of the business.
According to a proposal submitted to the bank's board of directors, Credit Suisse wants to sell profitable units such as its securitization business, hoping to avoid compromising its ability to raise funds. The securitization business, which packages debt such as mortgages and then sells them as securities, would reduce the bank's gearing but would also make it one of its most profitable businesses.
According to the statement given by Credit Suisse, the bank will update the progress of the comprehensive strategic review when it announces its third-quarter results on October 27.
Credit Suisse also said it wanted to strengthen its wealth management business, reduce its investment bank to a "capital-light, advisory-led" business and evaluate strategic options for its securitization products business.
cutting costs may also be one of the ways to save yourself. In early September, Reuters reported, citing anonymous sources, that Credit Suisse planned to cut 5,000 jobs, accounting for about one-tenth of its total workforce. The overall cost of the group was cut by another US$1 billion.
also reported that Credit Suisse is trying to seek new funding from investors in a bid to overhaul its investment bank. Analysts at
estimate that it could face a capital shortfall of around 4 to 6 billion Swiss francs, depending on how it scales down its investment bank and how much it raises from asset sales to restructure, support growth and have safety buffers. Asset sales would help, but any share sale would severely dilute long-term holders, "the good news is that some of that is already priced in," Keefe, an analyst at
Bruyette & Woods, said in a note.
However, a Credit Suisse executive denied news that the bank may be in formal talks with investors about raising capital, insisting that with its share price at historic lows and borrowing costs rising due to a downgrade, Credit Suisse is trying to avoid such a move.
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