Its increasingly precarious situation has led the market to care once again about a financial instrument that shares blame for exacerbating the 2008 financial crisis: the credit default swap. Over the last three quarters, Credit Suisse lost $4 billion, according to Reuters - not a good position for Switzerland’s second-largest bank. After that, the bank had to sell its brokerage unit that works with hedge funds and struggled to raise money. Bill Hwang, CEO of the investment firm, had allegedly lied about its positions in the markets to multiple banks, including Credit Suisse, that were funding his outsize bets, according to a criminal indictment filed against him by the Justice Department in April. The next year, Archegos went under, dragging Credit Suisse with it. While this wasn’t illegal, it deeply damaged the bank’s reputation and led its CEO, Tidjane Thiam, to resign in 2020. The spying episode had been embarrassing the bank for years - starting off as an isolated incident of a PI trailing a former banker and later ballooning to at least seven different bankers. But is it actually in danger, or is this just vigilante traders pushing a bank to the brink? And if it collapsed, would it really be that bad?Ĭredit Suisse has seen its reputation splinter since 2019, thanks in part to a corporate-espionage scandal - top brass would spy on bankers, then misled regulators, and one investigator died by suicide - and the shoddy management that led to the bank getting caught flat-footed by Archegos’ collapse. As the global economy has slowed, traders have been making bets that Credit Suisse wouldn’t be able to make good on its debts, and its stock has fallen to its lowest point ever.
Credit Suisse has already seen serious trouble in the last 18 months after the investment firm Archegos Capital collapsed, causing the bank to lose about $5.5 billion, close some of its major operations, and issue a mea culpa that laid out how it missed the fact that it was getting fleeced. This weekend, the markets zeroed in on Credit Suisse as the first major bank to possibly fail during the current global financial turndown.īased in Zurich, Credit Suisse isn’t exactly a household name here in the U.S., but it is a key part of the New York financial firmament, with a large office in Manhattan and about $1.5 trillion in assets, meaning that a blowup would be about as risky to the financial system as Wells Fargo’s and Morgan Stanley’s - the most visible investment bank to back Elon Musk’s bid to buy Twitter. Photo: Emmanuel Dunand/AFP via Getty Imagesįor the last 14 years, Wall Street has lived in fear that something on the scale of Lehman Brothers’ collapse would come again and that, when it did, we would have no warning about the financial destruction it would reap.
0 kommentar(er)
