The fall of Credit Suisse bank after SVB

16/03/2023

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The fall of Credit Suisse bank after SVB

After the sudden collapse of the US-based Silicon Valley Bank (SVB) and Signature Bank, now another reputed group is on verge of collapsing. Credit Suisse is going to be the next one to fall as its shares of the bank has been reeling with problems for a long time and it sharply downed nearly 30 per cent.

The issue:

Credit Suisse’s shares had plunged more than 30 per cent, after its largest shareholder Saudi National Bank (SNB) said it could not provide further support.

Saudi National Bank cleared its denying on holding more shares due to regulatory grounds.

Currently Saudi National Bank holds 9.88 per cent of Credit Suisse.

About Credit Suisse:

It is a global investment financial and banking firm which providing services like investment banking, private banking, Asset Management and shared services to banks in the world.

It was founded in 1856 by Alfred Escher, Allegemeine Deutsche and Credit-Anstalt.

HQ: Zurich, Switzerland

Chairman: Axel Lehmann

CEO: Ulrich Korner

The problems Credit Suisse is facing:

Switzerland’s second-biggest bank is fighting to recover from a string of scandals that have countermined the confidence of investors and clients.
Santander Consumer USA has also postponed the sale of bonds worth $942 million that are backed by subprime auto loans due to deepened Credit Suisse Group AG crisis.
Credit Suisse debt has widened to 574 basis points from 549 bps at last close after five-year credit default.

Steps taken to manage crisis:

In order to manage the current crisis, Credit Suisse Group AG announced to borrow up to $54 billion from the Swiss National Bank for strengthening its liquidity.
The additional liquidity might be support Credit Suisse’s core business and clients as the bank takes necessary steps to create a simpler and more focused bank built.
Even the pressure is made out on the Swiss government to bail out the major bank. So, Swiss government might be take necessary steps to relief pressure on bank in near future.