Credit Suisse shares were down 25% from the previous day’s trading. Indeed, this bank has experienced problems since the last few months due to bad internal management.
CNN said that Credit Suisse would ask for liquidity assistance from the Swiss National Bank of around 50 billion Swiss Francs or the equivalent of US$ 53.7 billion. In a statement, Credit Suisse said that this liquidity assistance was expected to help the bank’s business in the future.
Credit Suisse, a bank founded in 1856, is one of the largest financial institutions in the world. It is even included in global banks with systemic impacts such as JP Modgan Chase, Bank of America, and Bank of China.
A number of large investors on Wall Street said that Credit Suisse had been in trouble for the last few years, such as the company’s compliance issues which had damaged its reputation in the eyes of clients and investors. This condition also makes bank officials lose their jobs.
Last year, customers withdrew their funds at Credit Suisse in a large amount, amounting to US$ 133 billion and at the same time the bank lost US$ 7.9 billion. This is the biggest loss since the global financial crisis occurred in 2008.
Well, what about Silicon Valley Bank?
The Collapse of the Silicon Valley Bank and Its Impact on European Finance
Silicon Valley Bank
Not only Credit Suisse, Silicon Valley Bank is also experiencing a collapse. Even banks are also looking into options for bankruptcy protection. SVP is exploring strategies for asset transfer and restructuring.
The SVB’s downturn began when the US central bank began hoisting its benchmark interest rate last year to control inflation. The central bank raised interest rates aggressively which made credit interest rates skyrocket. This condition actually makes technology company shares weaken.
Furthermore, this high interest also affects the value of long-term bonds held by SVB and other banks. The reason is they have these securities in an era of low interest rates.
Now that SVB’s US$21 billion bond portfolio yields an average of 1.79%, the current 10-year Treasury yield is around 3.9%.
SVB also experienced massive withdrawals of funds by its customers. This causes banks to experience liquidity difficulties. Then bank shares began to fall last Thursday, many people worried that the 2008 crisis would happen again.
However, market players believe that the financial sector is still safe from the impact of bankruptcy. The financial sector is still in a good situation with the movement of foreign capital towards emerging markets.
The SVB case itself is unlikely to have as big an impact as the fall of Lehman Brothers in 2008 which created a global economic crisis.
“And the world believes the US can stabilize its financial sector because it will affect the global financial sector which is currently still in turmoil as a result of Russia’s special operation to Ukraine which is still in a mess,” he said.
This bankruptcy must still be a matter of concern. We must not be complacent, we still have to be vigilant and pay attention to shared risks