Key Takeaways:
- Credit Suisse is trying to save itself from a financial collapse
- Experts believe the bank could eventually fold like the Lehman Brothers did in 2008
- The lending giant will sell its iconic Savoy Hotel to coup much-needed cash
YEREVAN (CoinChapter.com) — Credit Suisse has reportedly offered to buy back over $3 billion worth of its debt securities amid talks that the bank could fold soon owing to substantial financial troubles. The Lehman Brothers-like crash could come as early as 5 years if the bank cannot maneuver out of its current situation.
To scrape out cash to save itself, the bank will also be selling the iconic Savoy Hotel in Zürich, the largest city in Switzerland.
The development comes days after Credit Suisse’s shares fell to an all-time low, creating panic among investors.
“The transactions are consistent with our proactive approach to managing our overall liability composition and optimizing interest expense and allow us to take advantage of market conditions to repurchase debt at attractive prices,”
the bank said in a statement on Friday.
Moreover, the bank’s Credit Default Swaps, or CDS, have surged. This spells trouble for the financially troubled bank as the markets observe increasing CDS as a high investment risk.
The figures mirror the 2008 financial crisis, which saw banking giant Lehman Brothers go bankrupt.
_____________________________________________________________________________________
Recommended: North Korea and South Korea On The Brink Of War As Kim Jong Un Launches More Missiles
_____________________________________________________________________________________
What is happening to Credit Suisse shares?
Credit Suisse’s troubles are not new. The bank has been facing a crisis for at least a few years, with no recovery in sight. Just four years back, in 2018, a single share of the major market lender fetched as much as $20. Meanwhile, in February 2021, the market price of the bank’s shares was $14.
However, the bank has faced numerous scandals in recent times, which have added to the bank’s woes. Last year, the financial giant revealed it had a $5 billion exposure to hedge fund Archegos, which collapsed in March 2021.
Credit Suisse shares fell under the $4 mark on Friday, taking its losses since the first few days of September to nearly 30%. Year to date, the price of the bank’s share has fallen by over 50%, with no end to its troubles in sight.
Last week, Credit Suisse reported losses to the tune of $1.6 billion in the second quarter (Q2) of 2022.
To make matters worse, many bank employees have resigned amid the crisis. On Wednesday, the bank announced that the deputy head of its Asia-Pacific wealth management business Young Jin Yee had stepped down.
The bank will also be looking to lay off thousands of employees to cut overall costs by $1 billion.
Meanwhile, Credit Suisse has rubbished talks that the bank will face a Lehman Brothers-like situation.
“Our position in this respect is clear. Credit Suisse has a strong capital and liquidity position and balance sheet. Share price developments do not change this fact,”
the Financial Times quoted a bank executive saying.
As the financial crisis deepens, it remains to be seen if the bank can make a recovery or will fold for good.
_________________________________________________________________________________________
Also Read: https://coinchapter.com/we-must-change-course-un-warns-that-the-world-is-on-the-brink-of-recession/
_________________________________________________________________________________________
