Tuesday, March 21 2023

It seems that since 2020, i.e. from Covid Year, we are living in interesting times, followed by the geopolitical issue, inflation challenge, weak market sentiments, probable recessionary fears and recently two US banks; Silicon Valley Bank (SVB) and Signature Bank have ducked and the historied 'too big to fail' Credit Suisse (CS) came on a brink of collapse. Interestingly, the "Early Warning Signs" were missed, the rumor that was hovering five months ago came true for Credit Suisse. According to its latest quarterly report (9 Feb’23) net income loss towards shareholders stood at CHF (-)1,393 million (fourth-quarter’22) whereas pre-tax income loss remained at CHF (-)1315 million. In FY22, the overall loss to shareholders appears at CHF 7,293 million, more than four times that of FY21. Also, the 4Q22 loss has been impacted by the adverse “Investment Bank performance” and “lower client activity.” Another Swiss investment bank, UBS has declared in its 19th March 2023 Press Release that it plans to acquire Credit Suisse, which is expected to create a business with more than USD 5 trillion in total invested assets and sustainable value opportunities, though this came at a rather substantial cost for some categories of investors, as acquisition price was CHF 0.76 a share, well below CS’s CHF 1.86 closing price on 17 March2023, and around CHF 16 billion worth of CS Additional Tier 1 capital bonds are being smeared out, along with other lenders’ AT1 bonds are also burdened.

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