Credit Suisse, one of Switzerland’s largest banks, is facing an unprecedented crisis. Since today morning, Credit Suisse is experiencing its highest probability of default since 1857. The bank’s probability of default now stands at 47%, and it is constantly increasing. Just a few hours ago, the probability of default was 38%. This alarming news has sent shockwaves through the financial world. Such news, of course, will affect every industry without exception. Credit Suisse is now scrambling to find a way out of this dire situation.
One attempt to redeem itself is retaining deposits that are being moved out. As of right now, Credit Suisse is offering deposit rates of 6.5%. Experts see this move as a desperate attempt to prevent a bank run. However, even these shocking deposit rates may not be enough to save the bank. Hours after the news spread, the Saudis reportedly said that they will not invest in the Swiss bank. So, not even the Saudis will support the bank. If that was not enough, the largest shareholder of the bank just announced that it cannot provide any further financial support.
Credit Suisse Might Go Bankrupt, Analysts Say
With the situation as it is, some analysts believe that Credit Suisse might go bankrupt. The bank’s stock price is currently down 96%. For a bank that was created to support Europe’s industrialization, the relentless de-industrialization of Europe may have impacted the situation heavily. In essence, the de-industrialization of Europe means reduced demand for Credit Suisse’s services. This led to a decline in the bank’s profitability.
Adding to Credit Suisse’s troubles is the recent Archegos Capital Management scandal. The scandal led to significant losses for the bank, with its credibility dropping significantly. The scandal has raised questions about the risk management practices of these banks. This led to a significant sell-off of these major banks’ stocks.
The situation at Credit Suisse is a stark reminder of how fragile the global financial system is. Since 2008, the flaws of this system and the risks associated with the banking sector keep causing global crises. It highlights the need for improved risk management practices and greater regulatory oversight. While everything falls apart, Bitcoin advocates such as Michael Saylor believe that Bitcoin solves all this.
Silicon Valley Bank first, Credit Suisse second: What comes next?
The news of Credit Suisse’s increasing probability of default has shocked everyone. After the fall of Silicon Valley Bank (SVB), there are speculations that the ripple effect is starting. This time, however, we see it happening on a more global scale than in 2008. Experts believe that a failure of Credit Suisse could have ripple effects throughout the global financial system. As of today, there is rising panic among investors.
The situation at Credit Suisse is still unfolding, and it is unclear what the future holds for the bank. One thing is certain: the bank is facing one of the most significant crises in its history. However, we know that it will take significant efforts to prevent a default. As the world watches, Credit Suisse is fighting to maintain its survival.