• Market strategist Greg Foss has predicted that Credit Suisse will be the next major bank to collapse, citing capital trouble and a run on the bank.
• On Tuesday, Foss warned about the impending collapse of Swiss banking giant Credit Suisse on the Coin Stories podcast.
• Credit Suisse is one of 30 banks identified by the Financial Stability Board (FSB) as global systemically important banks (G-SIBs).
Credit Suisse Next to Collapse
Market strategist Greg Foss has predicted that Credit Suisse will be the next major bank to collapse, citing capital trouble and a run on the bank. The Swiss banking giant has also identified „material weaknesses“ in its financial reporting controls. Its shares plunged on Wednesday after the bank failed to raise capital from its largest investor.
Foss‘ Warning
On Tuesday, Foss warned about the impending collapse of Swiss banking giant Credit Suisse on the Coin Stories podcast. He is currently executive director at Validus Power Corp., and was formerly a founding shareholder of 3iQ Corp., senior portfolio manager with a focus on credit strategies at Fiera Quantum, managing partner for credit strategies at both GMP Investment Management and Marret Asset Management, and VP of Fixed Income Trading at TD Securities.
„Credit Suisse is a systemically important financial institution and there’s a run on the bank,“ said Foss. He elaborated: „The wealth division is losing assets in magnificent fashion and that’s a very key profit driver for the bank, and it’s essentially a run on the bank.“
G-SIB Status
Credit Suisse is one of 30 banks identified by the Financial Stability Board (FSB) as global systemically important banks (G-SIBs). Other banks on this list include JPMorgan Chase, Bank of America, Citigroup, HSBC, and Goldman Sachs. In 1988, Credit Suisse acquired First Boston—a well-known investment bank at the time—which could further complicate matters if CSFB gets into trouble due to potential exposure or counterparty risks associated with other institutions.
Foss‘ Rationale For CS Collapse Prediction
When asked why he believes Credit Suisse will be the next major bank to fall, Foss explained: „Because it’s in big capital trouble. It’s only got a 10-billion-dollar market cap for about a trillion dollars of assets, which is ridiculously low.“ He then pointed out that while Credit Suisse claims it meets standards set by Bank of International Settlements (BIS), these capital standards are not marked to market value.
Share Drop Following Capital Call Failure
On Wednesday afternoon shortly before close time in Zurich’s trading session shares dropped 5% when news broke that Credit Suisse had been unable to raise sufficient capital from its largest investor despite several attempts by CEO Tidjane Thiam over recent weeks . This drop brought share prices 25% lower than during January 2020 when speculation began around Thiam’s plans for raising additional capital via rights issue .