Rumors of a crisis have been mounting as customers of Credit Suisse (CS), the Swiss Global Investment Bank (IB), which has recently fallen into a capital crisis, made large amount of deposits withdrawal.
According to CNBC on the 23rd (local time), Credit Suisse is expected to lose 1.6 billion dollars in the fourth quarter alone. Credit Suisse suffered a total loss of $2 billion as it recorded losses for four consecutive quarters until the third quarter. Credit Suisse recorded more than $5 billion in losses last year as its capital was tied to the margin call scandal of Korean investor Bill Hwang’s Akegos Capital.
With rumors of a crisis circulating, deposit withdrawal is continuing, especially among super-rich people who entrusted money to Credit Suisse. According to the Wall Street Journal (WSJ), customer deposits of 88.3 billion dollars were withdrawn for 43 days from September 30 to the 11th of this month. This is 6% of the total $1.47 trillion received by Credit Suisse as of the third quarter. In particular, the departure from the super rich asset management sector, which is a key business, is remarkable, and the total amount of deposits taken out by super rich people during the same period amounts to $66.7 billion.
As large deposits were withdrawn in a short period of time, some branches of Credit Suisse failed to meet the liquidity conditions stipulated by the country’s regulators, CNN said.
Earlier this month, international credit rating agency Standard & Poor’s downgraded Credit Suisse’s long-term credit rating from “BBB” to “BBB-,” which is just above the junk rating. Credit Suisse’s stock price also fell 60% this year as trust faltered.
The anxiety of Credit Suisse customers continues to spread. On Reddit and Twitter, the online stock community in the U.S., articles that fueled rumors of a crisis in Credit Suisse were shared. There have also been claims comparing Credit Suisse to Lehman Brothers, which went bankrupt in 2008 due to subprime mortgage insolvency.
Credit Suisse plans to raise $4 billion by issuing new shares and sell a large portion of SPG (securitization product group) to Apollo Global Management to reduce SPG assets from the current $75 billion to $20 billion by the middle of next year. In addition, at the end of last month, Credit Suisse laid off thousands of employees and set a goal of reducing 15% of the total cost by 2025.