Financial News: What happened to Credit Suisse?
Recent news about SVB Bank
We just got the huge news about the sudden collapse of SVB bank which was a top 20 bank in the United States just a few days ago. It’s all over all media and it’s still a heavily talked about topic. I have funds in Stashaway and they sent an email to detail to all the investors that its funds are safe and exposure to SVB bank is negligible. I could accept their explanation, so my funds in Stashaway is still in Stashaway.
As for the article about SVB Bank, here’s that article: https://kopiandproperty.com/finance-news-moodys-us-banking/ Now, we have negative news about a globally recognished banking brand; Credit Suisse. What has happened?
What about Credit Suisse?
Let’s read from a global media; Reuters. This is the link if you like to read the article in full.
Credit Suisse will borrow up to $54 billion from the Swiss central bank to shore up liquidity after a slump in its shares and bonds.
The sell-off in Credit Suisse’s shares began in 2021, triggered by losses associated with the collapse of investment fund Archegos and Greensill Capital.
In January 2022, Antonio Horta-Osorio resigned as chairman for breaching COVID-19 rules, just eight months after he was hired to fix the ailing bank.
In July, new CEO and restructuring expert Ulrich Koerner unveiled a strategic review – but failed to win over investors.
Credit Suisse confirmed last month that clients had pulled 110 billion Swiss francs of funds in the fourth quarter while the bank suffered its biggest annual loss of 7.29 billion Swiss francs since the financial crisis. In December, Credit Suisse had tapped investors for 4 billion Swiss francs.
On Wednesday, Saudi National Bank (1180.SE), the bank’s top backer, told reporters it could not give more money to the bank as it was constrained by regulatory hurdles, while saying it was happy with the bank’s turnaround plan.
The shares have lost 75% over the past one year. This is the link if you like to read the article in full.
This is when the central banks need to step in and calm nerves
Banks should not be allowed to grow too big that the whole world is worried if it runs into trouble. I still think the same even if I am the minority. Please do not allow banks to take risks without any check and balance. If they win with their bet, the management team may get a huge bonus. If their risky action fails, many people will suffer and it’s not just the employees in the bank or the people in the country where the bank operates. The world is a small world these days.
Alternatively, there should be regulations in place so that the risks are managed accordingly. Regulators should also be very alert yeah. As we all know, bad news travel fast and it’s sometimes too fast. Reactions due to any rumours may just cause the actual event to happen these days. So, stopping the news would be impossible.
The focus should be on how to take the right actions and provide the right kinds of news to the public and calm nerves. I would not want any global bank to fail because they really do have a lot of shareholders and these shareholders are not the ones who’s managing the bank. I wish things would be more settled soon. I hope my wish comes true.
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