Switzerland's second-largest bank, Credit Suisse, has been in the news due to its falling share price, shaky financials and repeated management revamp. In the last year, the bank's value has fallen by more than 60 per cent.
Credit Suisse's current is $10.8 billion. It was over $25 billion in October 2021.
The development has brought back fears of a 2008 Lehman Brothers-like crisis for investors. All efforts to allay such fears have failed to make an impact.
In a memo released by the bank's CEO, Ulrich Koerner, to the staff, he assured them that the bank has a strong capital base and liquidity position. The bank continued the nosedive.
The bank reported high losses for the last three quarters, and there are several factors responsible for the crisis at First. This is worrying for the investors because of the global peers, including Goldman Sachs, reporting profits.
The losses of Credit Suisse have widened in the last two quarters. In Q 2 of FY 22 the Swiss francs lost 1,907 million Swiss francs. In Q 1 of FY22, the losses were 1,326 million Swiss francs.
Credit Suisse's investment decisions have led to huge losses in the past couple of years. The Archegos Capital Management case was the most notorious of all the deals.
The bank gave money aggressively to Archegos boss Bill Hwang. The company collapsed soon. Over $5.5 billion was lost in the course of the day because of a failed to exit on time.
The loans to the supply chain network, Greensill Capital, were defaulted on in the second case. The case has been going on for over five years.
The bank has lost nearly $10 billion in the two cases alone, which is equal to its current third. Since 2020, the bank's top leadership has seen several rejigs.
In 2020, CEO Tidjane Thiam was forced to quit after a spying scandal surfaced at the bank. Switzerland's financial regulators said that the bank misled it about the scale of its surveillance.
The bank's CEO was Thomas Gottstein until July 2022, and Credit Suisse chose restructuring expert Ulrich Koerner as CEO. Urs Rohner, the former bank chairman, left the office in 2021 after admitting that the bank had disappointed clients and shareholders.
His successor Antonio Horta-Osorio quit nine months later because he broke the quarantine rules during the Covid 19 epidemic.
Axel Lehmann is currently chairman of the bank.
Since the 2008 crisis for Credit Suisse, the CDS has touched the highest level since the 2008 crisis, which is a bet on whether the borrower will survive or not. It was widened to 250 basis points. It was 57 basis points at the beginning of 2022. This means that not many investors are ready to bet on Credit Suisse's survival.