European Bank Faiure

[Sgt Pepper]

Several articles this morning speculating Credit Suisse could fail. Should this occur would it it be another Lehman brothers? If so what would be the implications/fall out for New Zealand

[stoploss]

Several articles this morning speculating Credit Suisse could fail. Should this occur would it it be another Lehman brothers? If so what would be the implications/fall out for New Zealand
It is likely in the first instance the European central bank will be "fixing a hole", things should start getting better with a little help from their friends.
This could all be Lucy in the Sky with diamonds , but if you are lucky things will have recovered when I'm 64.

[Rawz]

if it goes really bad the FED and ECB printers will start going brrrrrrrrrrrr and the world will be right again :cool:

[ynot]

if it goes really bad the FED and ECB printers will start going brrrrrrrrrrrr and the world will be right again :cool:

So too big to fail. Have we not heard that before.

[traineeinvestor]

I did a quick Google search. There were no articles suggesting Credit Suisse was on the verge of failure on my top page of hits. There were several suggesting they need raise quite a lot of capital and/or need to sell assets to maintain a healthy level of capital, including the linked Bloomberg article. There was one about the expensive price of a recent bond issue. Even with the reported and speculated losses, insolvency is not what the market is saying.

From the Bloomberg article:

"While Credit Suisse exceeds its regulatory minimum requirements, the bank is below its future targets as well as the metrics of larger rival UBS Group AG (https://www.bloomberg.com/quote/UBSG:SW), [Deutsche Bank] wrote."

Credit Suisse has a number of business lines. Retail banking, private banking and asset management are largely "clip the ticket" operations and should remain profitable or highly profitable. I'm not sure about securitisation and derivatives (both of which are rumoured to be candidates for sale). Investment banking is where the major problems are (and not for the first time either) - possibly the best thing they could do is shut that division down.

Lastly, I looked at the pricing of some of Credit Suisse's bonds. It isn't a pretty sight but even the COCOs are not being priced for a substantial risk of default.

https://www.bloomberg.com/news/articles/2022-08-31/credit-suisse-faces-4-1-billion-capital-gap-deutsche-bank-says

[dabsman]

The biggest failure I've googled so far is the title to this thread ;)

[LaserEyeKiwi]

Unless there is massive fraud going on - nothing apparent that Credit Suisse is in any sort of danger.

I would suggest this is merely scaremongering, just like the stupid story last week about Xi being under house arrest.

[Jaa]

Unless there is massive fraud going on - nothing apparent that Credit Suisse is in any sort of danger.

I would suggest this is merely scaremongering, just like the stupid story last week about Xi being under house arrest.

Then why are their CDS at GFC levels?

[Habits]

Quite surprising for someone who has a long career in the health service to make these kind of unsubstantiated remarks. Maybe at home on strike against extra shifts. Very strange.