• 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 identified „material weaknesses“ in its financial reporting controls, leading to a share plunge on Wednesday.
• Credit Suisse is one of 30 banks identified by the Financial Stability Board as a global systemically important bank (G-SIB).
Credit Suisse Next to Collapse, Warns Strategist
Market strategist Greg Foss has warned about the impending collapse of Swiss banking giant Credit Suisse on the Coin Stories podcast, published Tuesday. His warning followed the collapses of several major U.S. banks and he believes that Credit Suisse is the next major bank to fall due to its capital trouble and run on the bank.
Foss is currently executive director at Validus Power Corp., and previously held various roles in credit strategies at Fiera Quantum, GMP Investment Management, Marret Asset Management and TD Securities. He explained that Credit Suisse’s wealth division is losing assets rapidly which is a key profit driver for the bank, essentially creating „a run on the bank“. In addition, with only 10 billion dollars market cap for about a trillion dollars of assets it’s no surprise that they did not meet Bank of International Settlements (BIS) capital standards which are not marked to market. This led to their shares plunging on Wednesday after failing to raise capital from its largest investor.
Global Systemically Important Bank
Credit Suisse is one of 30 banks identified by Financial Stability Board (FSB), in consultation with Basel Committee on Banking Supervision and national authorities, as global systemically important banks (G-SIBs). Other banks included in this list are JPMorgan Chase, Bank of America, Citigroup, HSBC and Goldman Sachs who all have exposure or counterparty risks if something were to happen with Credit Suisse First Boston (CSFB). CSFB was acquired by Credit Suisse back in 1988 and since then it has become an integral part of their operations making them even more vulnerable if CSFB were ever in trouble.
The Swiss banking giant has also identified „material weaknesses“ in its financial reporting controls which could indicate further problems ahead for them despite claims that they met BIS standards. These weaknesses could cause additional strain on their investors confidence leading them to pull out their money even faster if things continue down this path.
In conclusion it appears that things aren’t looking good for Credit Suisse as they face an imminent collapse according to market strategist Greg Foss who believes there’s a definite run happening at the moment within their wealth division which can lead them into more trouble unless something changes soon enough.