1. What went wrong?
Credit Suisse’s failings have included a criminal conviction for allowing drug dealers to launder money in Bulgaria,entanglement in a Mozambique corruption case,a spying scandal involving a former employee and an executive and a massive leak of client data to the media. Its association withdisgraced financier Lex Greensill andfailed New York-based investment firm Archegos Capital Management compounded the sense of an institution that didn’t have a firm grip on its affairs. Many fed up clients have voted with their feet,leading to unprecedented client outflows in late 2022.
2. What triggered the latest share slump?
Chief executive officer Ulrich Koerner launched a massive outreach to woo back nervous clients and their cash. The effort appeared to be paying off by January,with it reported “net positive” deposits. However,on March 9,the US Securities and Exchange Commission queried the bank’s annual report,forcing it to delay its publication. Panic spread afterregional US lender Silicon Valley Bank failed,the victim in part of risky investments and rising global interest rates that eroded the value of its bond holdings. Investors began ditching anything that smelled of banking risk and deposit flight.
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3. How bad did the situation get?
On March 15,Credit Suisse stock slumped anew when the chairman of its largest shareholder,Saudi National Bank,ruled out investing any more in the company. This prompted Credit Suisse to ask the Swiss central bank for a public statement of support. The cost of insuring the bank’s bonds against default for one year surged to levels not seen for major international banks since the financial crisis of 2008.