These are hours marked by a certain nervousness in financial circles. In a few hours, when the markets open, we’ll have a little better understanding of how good these fears are. There are rumors that A large international investment bank is on the verge of bankruptcy. Indiscretion which, as some media reports, comes from reliable sources. The main suspect is the Swiss bank CreditSuisse which has been sailing in choppy waters for some time, but someone is even daring to use the Deutsche Bank name. Friday the number one of the Swiss bank Ulrich Korner He acknowledged that the bank was “in a critical phase” while assuring the bank’s solidity and the availability of liquidity. At this point, if you feel the need to get insurance, it’s never a good sign.
The value of Credit Suisse shares has more than halved since the beginning of the year, with a 23% drop in just the last few weeks. In the last few days they’ve shot up, at the highest levels since 2009the prices of Credit Default Swap (CDS), which are financial products that essentially allow you to insure yourself against the insolvency of a company or government. Some analysts note that the so-called price-to-book ratio, which is the ratio of a company’s stock market value to the value reported in its financial statements, is now 0.22%, Values that are usually a harbinger of insolvency. In recent days, the bank has announced that it is considering selling some assets. It did not help Switzerland’s decision give up its historical neutralitya factor that would have caused a outflow of foreign capital from the main banks in the country.
Credit Suisse has been fined after a historic Swiss conviction for failing to properly monitor cocaine-related money laundering
In the first 6 months of 2022, the bank suffered a loss of 1.6 billion francs (1.1 billion euros) compared to the red 273 million in the same period of 2021. (Almost) everything can be repaired, especially with help by the central bank, in this case the Swiss. In general, the most fatal risk without outside help and the one that can quickly rush things is a lack of liquidity. Liquidity kills fast analysts say. The bank has 160 billion in cash and 40 billion in capital but it also has a “leveraged” exposure (ie, investing with borrowed money) of $900 billion. If lenders demanded more guarantees for these loans, a dangerous vicious circle would be set in motion. A few days ago, the Portal news agency wrote that the bank was looking for investors willing to underwrite a new one recapitalization, at the same time, he considered the possibility of selling his investment bank in the United States, an option later rejected by the Swiss institution. Last April, the bank was forced to raise 1.7 billion from investors as it tried to rebuild its capital as a gift i, crack from subsidiaries Archegos Capital and Greensill Capital.
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