Credit Suisse, the second largest bank in Switzerland by market value, plunged 30% on the stock market. The multiple problems facing the bank and the rumors of bankruptcy make it the “Swiss Lehman Brothers”.
The legendary bank, founded in 1856, is going through reputational scandals, collapsed venture firms and the financial market crisis sparked by the failure of Silicon Valley Bank (SVB) last week.
The Zurich-based bank is having its worst moment in its 167-year history. Its shares have lost 30% of their value since the middle of last week, but it has been two years of millions in losses.
In 2021, Credit Suisse reported losses of 1.6 billion euros. These increased fivefold in 2022 to 7.4 billion euros. The bank also suffered last year the withdrawal of liquidity for 126,000 million euros.
Credit Suisse Saudi investor rules out injecting more funds
On Wednesday, Credit Suisse shares plunged more than 20% to a record low after its largest shareholder ruled out injecting more funds.
The president of the Saudi National Bank said in an interview with Bloomberg that it would not increase its stake in the Swiss financial institution
“The answer is absolutely no, for many reasons. I will cite the simplest reason that is regulatory and statutory. We now own 9.8% of the bank; if we go above 10%, all kinds of new rules will come into force, either by our regulator or the European regulator or the Swiss regulator,” Ammar Al Khudairy told Bloomberg.
Scandals inside the Swiss bank
In addition to Credit Suisse’s financial problems, there are several layoffs and resignations of top executives due to reputational crises.
In January 2022, the then president of the entity, Antonio Horta-Osorio, resigned for having attended a sporting event when he was supposedly in quarantine during the pandemic.
His successor Alex Lehman was later investigated by Finma, Switzerland’s financial regulator, for claims about the bank’s condition that may have misinformed the bank’s investors. The CEO said on Swiss public radio in December that Credit Suisse was regaining liquidity, when in fact it was experiencing capital flight.
On the other hand, the bank was also investigated in 2022 by fifty global media for allegedly having kept fortunes of people linked to corruption for decades.
March Violante Martha Elena Violante (March Violante) is editor-in-chief and co-founder of Emprendedor.com and has a 10+ year career in digital journalism. She has interviewed figures such as Randi Zuckerberg, Daniele Lamarre, Zoe Saldana, among others. She has worked in media such as Entrepreneur in Spanish and English, Alto Nivel, Cine PREMIERE, México Desconocido, among others. “We are entrepreneur.com”