Is @CreditSuisse safe?
1/12 Credit Suisse's #CDS premiums have soared to higher levels than during the 2008 financial crisis, fueling speculation of a crisis.
1/12 Credit Suisse's #CDS premiums have soared to higher levels than during the 2008 financial crisis, fueling speculation of a crisis.
2/12 A credit default swap(CDS) premium is the rate at which an insurance policy guarantees the principal in the event of a default,
3/12 and a higher #CDS premium means that the risk of default is higher, and therefore the policy requires a higher fee. #CreditSuisse blames three events in 2021 for the rise in CDS premiums. First, around March 2021, Bill Huang's Archegos Capital collapse.
4/12 Bill Huang borrowed close to $60 billion against $7 billion in collateral to buy Chinese stocks, including Baidu, which were then sold against as the Chinese stock market crashed. #CreditSuisse ended up losing $5.2 billion.
5/12 Second, around the same time, in early March 2021, UK-based #Greensill Capital filed for bankruptcy. #CreditSuisse was an almost exclusive buyer of asset-backed securities(ABS) created by Greensil Capital.
6/12 As the pandemic worsened, note issuers began to fail, and ABS that pooled accounts receivable began to lose money. Unable to sustain the losses, #Greensil Capital filed for bankruptcy in March 2021, and #CreditSuisse lost about $7 billion on the ABS.
7/12 In a third incident, in March 2022, a #CreditSuisse whistleblower anonymously leaked inside information to the German newspaper Suddeutsche Zeitung. The list revealed that Credit Suisse was managing the unusual assets -
8/12 of everyone from human traffickers to dictators, corrupt figures, and individuals under economic sanctions. The assets entrusted to 30,000 unusual clients totaled more than $100 billion.
9/12 However, #CreditSuisse refused to respond to the reports, citing Swiss laws. The $88.3 billion in deposit outflows in a month and a half could have been due to the $100 billion entrusted to these 30,000 customers, rather than individual customers running away from the bank.
10/12 #CreditSuisse is about to release its 2022 financial statements, but the U.S. stock exchanges have ordered a delay. After working something out with the #US stock exchange, they did release their 2022 results, but a net loss of $8 billion was eventually confirmed,
11/12 and worse, serious weaknesses were found not only in the 2022 financial statements, but also in the financial reporting for 2019, 2020, and 2021. In the fourth quarter of last year alone, 110 billion Swiss francs in deposit withdrawals were also confirmed.
12/12 Currently, #CreditSuisse is falling further as news breaks that Saudi Arabia will not provide additional support. It's time to revisit the risk management aspects of your portfolio.
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