Credit Suisse “Near Death” As Dire Times Loom For Large Banks

Key Takeaways:

  • Credit Suisse has solid capital and liquidity —CEO.
  • Credit Suisse is not the next Lehman Brothers, says analyst.
  • Suisse’s euro bonds drop more than 5 cents, hitting record lows.
Credit Suisse Bank bankruptcy
Suisse’s euro bonds have dropped more than 5 cents, hitting record lows.

LAGOS ( — The financial woes of 2022 seem to be unending as Swiss banking giant, Credit Suisse, according to recent reports is in bankruptcy trouble and is currently fighting for its survival.

In detail, speculation concerning the financial status of the No. 2 Swiss bank has been going on for several months. The speculations however spiraled this weekend as reports emerged that the investment firm was going under.

The Wall Street Journal’s columnist Spencer Jakab and several pundits have also predicted the demise of the investment firm. Investment forum Wall Street Silver through its Twitter handle also posited that the bank was on the verge of bankruptcy.

Credit Suisse's share price
Credit Suisse’s stock price

“Credit Suisse is probably going bankrupt … $CS. The collapse in Credit Suisse’s stock price is of great concern. From $14.90 in Feb. 2021 to $3.90 currently. And with P/B=0.22, markets are saying it’s insolvent and probably bust. 2008 moment soon? Systemic risk bank.”

It tweeted.

Currently, Credit Suisse going bankrupt could trigger an economic crisis not recorded since the Great Depression. Notably, a negative outcome is likely to cause a shock equivalent to that caused by the bankruptcy of the fourth largest investment bank in the US Lehman Brothers in 2008.

As a result, Credit Suisse CEO Ulrich Koerner in a memo at the weekend reassured investors of the bank’s financial capabilities. He debunked the rumors currently doing the rounds saying that the company has solid capital and liquidity. He, however, indicated that the firm is facing a “critical moment.”

“We are in the process of reshaping Credit Suisse for a long-term, sustainable future – with significant potential for value creation. I am confident we have what it takes to succeed.”

Koerner added.

‘Credit Suisse Is Not The Next Lehman Brothers’

As financial pundits continue to warn over Credit Suisse’s impending doom, others have aligned with Koerner over the investment firm’s future. Boaz Weinstein, the financial crisis CDS king and founder of Saba Capital Management, noted that the Credit Suisse bankruptcy narrative is overblown.

‘Credit Suisse Is Not The Next Lehman Brothers’

Weinstein argued that some persons are intentionally spreading “scaremongering” reports. He added that Credit Suisse isn’t Lehman in 2008, saying “Credit Suisse may not be a good business, but that doesn’t mean it’s also very risky.”

Similarly, Tom Braithwaite condemned Jakab for his tweet, urging him to delete it. Another pundit pointed out that the Swiss bank as per its history prides itself on the safety of its platform for investors. He said the speculations are confusing a US investment bank with a Swiss bank which is more secure and reliable.

Furthermore, some of Credit Suisse’s recent ex-traders and MDs agree with Koerner’s verdict that all is fine. “The market is volatile and Credit Suisse is not liked. But they don’t need that much capital and their CDS spreads are half the level of US banks in 2012,” one of the former MDs stated.

“It’s BS. Credit Suisse has been de-risking and now has one of the safest balance sheets in the market. It’s been under heavy scrutiny for the past two years and claims that it’s the next Lehman are complete nonsense from people with no understanding of financial analysis.”

Moreover, head of research at Goldmoney, Alasdair Macleod, pointed out that the Swiss bank is not the only major bank whose price-to-book is flashing warning signals. He indicated that Deutsche Bank, Credit Agricole, Unicredit, Barclay, and Bank of China price-to-book are also flashing warning signals.

head of research at Goldmoney, Alasdair Macleod, pointed out that the Swiss bank is not the only major bank whose price-to-book is flashing warning signals.

Suisse’s Euro Bonds Hit Record Lows

However, reassurance from Koerner and other financial stakeholders has not been able to secure investors’ concerns as euro-denominated bonds issued by Credit Suisse dropped to record lows today.

The embattled lender’s longer-dated bonds suffered the sharpest declines. According to data from Tradeweb, the 2032 and 2033 issues dropped more than five cents to trade at 71.6 cents in the euro and 54.2 cents in the euro respectively.

Additionally, it is worth noting that a year ago, the Swiss bank had a market capitalization of $22.3 billion. Today, its market value is only $10.4 billion.

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