Experts say the upheaval is largely a byproduct of Credit Suisse's troubles in recent years — making it look relatively vulnerable — and investor worries about the health of Western banks in general following the collapse of
Shares of Credit Suisse sank over 30% Wednesday after its biggest shareholder — the
On Friday, shares dropped 8% to close at
“The Swiss National Bank has in effect pulled Credit Suisse back from the cliff’s edge and is likely to have done enough to stabilize the situation with the massive liquidity infusion,’’ said Prasad, who studies the global financial system. “The wild card is whether steps taken so far by the
The Saudi bank's chairman acknowledged surprise at the fallout from his comments but said he was “optimistic” that Credit Suisse would "go back to being what it is" — a bank with a storied legacy dating back more than a century and a half.
"I think the markets are very skittish, and they are looking for stories or things that validate concern,"
He called Credit Suisse's private wealth management, domestic Swiss banking and asset management divisions “stable, long-term consistent businesses” and that the Swiss bank was “working on shedding the other, more-volatile business.”
In the wake of reforms enacted after the 2008 financial crisis, Credit Suisse is among the 30 financial institutions known as globally systemically important banks, which have stricter scrutiny and higher capital requirements.
Credit Suisse was founded as “Schweizerische Kreditanstalt” in 1856 by industrialist
At the time, it was a high-risk, loss-making industry. Historians say a penchant for risk and innovation permeates through the corporate culture even today.
By 1977, Credit Suisse was at the center of a banking scandal known as the “Chiasso Affair,” which led the bank to lose nearly
The “internationalization” of Credit Suisse — focusing more on
“(Swiss bankers) simply couldn’t cope with this American investment bank culture, with its focus on risk and high profits,” he said. “The combination of Anglo-Saxon investment banking and Swiss asset management did not work in the long run."
The “end of banking secrecy” in
Other Western countries pressured
More recently, the issues at Credit Suisse have been mostly about poor corporate governance, questionable staffing decisions and excessively risky investments.
In 2020, CEO
Two years later, his replacement — longtime Credit Suisse veteran
Credit Suisse even found itself in Swiss court, getting fined last June for failing to prevent money laundering by a Bulgarian crime ring 15 years earlier. The case partly involved an unidentified wrestler accused of trafficking tons of cocaine through “mules” from
The bank last fall announced settlements worth hundreds of millions of dollars with authorities in the
Credit Suisse is “in trouble because it’s been in trouble for a really long time. It has a whole host of other challenges that everyone’s focusing on now because of bank wobbles in the U.S.,” said
That's different than
“This is not 2008 all over again,’’ Greene said. “But the overreactions that we’ve seen in the market have been eerily reminiscent of 2008. That has gotten everybody’s Spidey-sense tingling."
She said she was worried, "but rationally speaking, there isn’t a reason to think that a banking crisis is inevitable. It’s just that markets aren’t always rational."
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Wiseman reported from
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