The “old bank” that did not survive
This time, I would like to talk about the third bank that failed in the world, Credit Suisse.
Silicon Valley Bank and Signature Bank are relatively large banks in the U.S., but they are not regional banks.
However, Credit Suisse is a well-known bank in the world. It was founded in 1856. It was the leading bank in Switzerland, founded to build and develop the railroad network across the Alps.
In the past, Swiss banks had a tradition of absolute confidentiality with their clients, and many wealthy individuals preferred to bank with us.
That policy had to be changed in 2013 due to pressure from the United States, and Credit Suisse in particular has had a series of scandals in the past few years.
In 2021, a series of hedge funds in which the bank had invested collapsed. This resulted in losses totaling $15.5 billion (approximately 2.341 trillion yen) and severely damaged its credibility.
On March 15, Saudi National Bank, Credit Suisse’s largest shareholder, announced that it would not provide additional financing. As a result, Credit Suisse’s share price temporarily fell by more than 30%.
On the 19th, UBS, another major Swiss bank, decided to acquire Credit Suisse for 3 billion francs (approximately 420 billion yen), thus averting a crisis for the time being.
◆What do failed banks have in common?
Currently, the financial industry is calming down, and for now, the possibility of a global financial crisis is seen as small.
In just a few days, a series of large banks have failed, and in fact, these three banks have one thing in common. They all took too much risk.
Silicon Valley Bank was involved in lending to startups, a business that the big banks would not touch, and Signature Bank’s main customers were crypto-asset-related companies.
Credit Suisse’s big losses were also triggered by its investments in very high-risk investments made by British startups and American private investment managers.
Simply put, the three banks failed because they were blinded by high returns and failed to prepare for risk. No matter how big a financial institution is, if it cannot control risk, it will fail.
Asset management is not scary at all as long as we always pay attention to global trends and are prepared to respond to crises whenever they occur.