The major Swiss bank Credit Suisse wants to borrow 50 billion francs from the Swiss National Bank. Officially, this is a “preventive measure”. In fact, this is tantamount to a bailout. How bad is the western banking system?
In a press statement, major Swiss bank Credit Suisse said that as a “precautionary measure” to “bolster liquidity” it would borrow a total of CHF 50 billion from the Swiss National Bank (SNB) under a secured credit facility “fully collateralized by high quality assets is”.
The bank also announced offers from Credit Suisse International to repurchase certain OpCo senior debt for up to CHF 3 billion in cash. This is intended to help the bank rake in pennies in bond discounts even as it faces a tens of billions of dollars in deposits. It could also be said that it is a last-ditch infusion of liquidity, purely to prevent forced asset liquidations (like the SVB). In the meantime, nothing is being done to stop depositors fleeing because once confidence is broken it rarely returns.
According to a Reuters report, Switzerland had previously received pressure from abroad to intervene to rescue the major bank. Because Credit Suisse is considered “systemically important” and “too big to fail”. The bank’s management has also put pressure on the SNB, as the “Financial Times” reports. Because if the central bank does not intervene to save the big bank, Switzerland as a financial center will suffer massively. The reputation of the Confederation is at stake.
This shows that a comprehensive bank crash (the damage caused by the 2008/2009 financial crisis is far from being repaired) is entirely possible given the ongoing critical situation on the global financial markets. An event that also endangers people’s private savings. In addition, it can be assumed that even more banks will soon be asking for help from the central banks, especially since Credit Suisse has not made as many negative headlines as many other major banks.
Karma⚡️Credit Suisse which which was first to assign Zero Lending Value to Adani Group Bonds following Hindenburg allegations and supported the hit job, is in Deep trouble.#CreditSuisse ‘s biggest backer, Saudi National Bank, has said We cannot increase stake because we cannot… https://t.co/AOAnVL41dT pic.twitter.com/qiMrdpuQMD
— Megh Updates 🚨™ (@MeghUpdates) March 15, 2023
Meanwhile, Credit Suisse’s risk of collapse is reportedly as high as 47 percent. The bailout by the SNB could have reduced the probability somewhat.
Credit Suisse now has a probability of default of 47%. That is up from 38% just a few hours ago.$CS is also offering crazy deposit rates of 6.5% to attract and retain deposits that are being moved out.
Do we see a bailout by this weekend ??? pic.twitter.com/URAhvBX6GH
— Wall Street Silver (@WallStreetSilv) March 15, 2023
One of the reasons for the bank’s difficulties is probably the fact that after the Russian funds were frozen, many international depositors from less US-friendly countries (including the Chinese) also withdrew their money from the supposed “safe haven”.
Swiss banking suicide.
After sanctioning Russia, Russian and Chinese wealthy individuals have been withdrawing funds massively
With the possible collapse of Switzerland’s second largest bank/ Credit Suisse, the country could go down with ripple effects in the whole economy
— Angelo Giuliano 🇮🇹 🇨🇭/ living in 🇨🇳 (@Angelo4justice3) March 15, 2023
How critical is it getting in the western banking world?
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