This Swiss bank has recently been battling rumors on social media about its balance sheet status, trying to convince investors and clients that its financial health is not a problem.
In the past few days, Credit Suisse(Credit Suisse)Struggle against rumors on social media about its balance sheet status, trying to convince investors and customers that stock prices have plummeted and credit default swap(CDS)The soaring interest rate spread does not necessarily indicate the true health of the bank. At the center of this storm is a simple issue (since Credit Suisse announced this summer that it plans to downsize its investment banking department and cut15Since the cost of billions of Swiss francs, analysts and market commentators have been asking this question: How large will the capital gap actually be? Deutsche Bank(Deutsche Bank)Last month, analysts estimated that due to restructuring costs, the need to expand other business lines and regulatory pressure to improve Capital adequacy ratio, the Swiss bank needs to find additional40100 million Swiss francs. Reducing the investment banking department and laying off thousands of employees will result in layoff costs, potentially leading to losses being written off when closing high-risk transactions. The bank will also need to invest in other parts of its business, especially wealth management, to expand revenue sources and compensate for the loss of investment banking revenue. By last Friday,Keefe, Bruyette & WoodsAnalysts estimate that Credit Suisse's capital gap has reached60100 million Swiss francs. They propose that this means that Credit Suisse will require investors to provide40A capital of one billion Swiss francs to complement a clear growth plan and/Or offset any unknown factors such as litigation or customer churn concerns. For a company whose stock price has fallen in recent weeks25%Reduce market value to100For banks with billions of Swiss francs, requesting investors - they have already had to bearArchegosAnd Greenhill(Greensill)The loss caused by the scandal - the prospect of releasing additional capital - seems increasingly terrifying. Credit Suisse has stated that it will release detailed plans for its streamlined investment banking department by the end of this month at the latest. The bank's executives insist that raising additional capital will be the last resort. I want to be clear, we haven't consulted investors on the fundraising, "said a banker. He spent the entire weekend calling top clients and counterparties, trying to assure them that Credit Suisse's finances were quite healthy. We will conduct asset sales and divestments so that our bank can provide funding for the planned strong turnaround and become a stable enterprise The bank plans to sell certain parts of its investment banking business, potentially including its cherished securitization product business. Analysts estimate that this move is expected to raise up to20100 million Swiss francs. Before Credit Suisse executives were forced to launch a charm offensive, last week the group'sCDSThe soaring interest rate spread indicates that investors' views on the group are becoming increasingly pessimistic. Last weekend, social media and online forums were filled with rumors about the bank's imminent bankruptcy. On Monday, the situation became clear: the bank's communication efforts failed to calm the market's nervousness. Traders and investors compete to sell shares and bonds of Credit Suisse, while also buyingCDS。 According to the quotation seen by the Financial Times, Credit Suisse's five-year termCDSMonday surge100Multiple basis points, with some traders quoting up to350Basis points. The stock price of the bank has dropped to3.60A historical low below the Swiss franc, with a close decline at the opening10%。 The two things that investors and social media commentators seem to be most concerned about are the bank's capital situation (reflecting its ability to absorb losses) and its liquidity level (which will be tested during short-term stress periods). The bank insists that there are no risks in either aspect. stay7In the previous quarter's monthly report, Credit Suisse reported its common equity tier 1 capital ratio(CET1)——Reflecting its financial resilience - for13.5%, in its current year13%to14%Within the target range of, above2015Of11.4%and2020Of12.9%, equivalent to370A capital of one billion Swiss francs. If compared to other European banks, Credit Suisse'sCET1Ratio and UBS(UBS)HSBC(HSBC)Deutsche Bank and BNP Paribas(BNP Paribas)Similar to peers in the industry. In addition, the bank has157Other Tier 1 capital of CHF billion(AT1)This is achieved by issuing so-called "contingent convertible" bonds (abbreviated ascoco）Raised, they can be converted into stocks during periods of stress. Credit Suisse raised funds this summer15Billion dollarAT1Capital, related bond provision9.75%The rate of return. Although it looked expensive at the time of issuance, the bank was subsequently downgraded by multiple credit rating agencies, resulting in the current yield of the bond being12.5%。 In addition, the bank reported in its latest financial performance that it has442100 million Swiss francs of 'capital in discontinued operations'(gone concern capital)This is the additional capital required by Swiss regulatory authorities, with the aim of absorbing losses without triggering bankruptcy. Before customers or employees are affected in any way, our bank will need to burn them down970A capital of one billion Swiss francs A senior executive at Credit Suisse transferred the bank'sCET1、AT1And the capital under non going concern conditions was added together to make a statement, 'UBS burned tens of billions of Swiss francs during the financial crisis and received a bailout. This is not what Credit Suisse is today.' Last weekend, some people compared Credit Suisse's situation to2016In comparison, Deutsche Bank's debt suffered a sell-off in, when the market was concerned that the German bank would have to skip certain coupon payments on its capital bonds, resulting inCDSThe market has experienced drastic fluctuations. For (Credit Suisse) and2008Certain banks or2016We will hold a cautious attitude towards the statement that the German and silver banks are comparable in the year Citigroup(Citigroup)Analyst Andrew Combs(Andrew Coombs)express. The market seems to be considering a highly diluted fundraising in terms of price. We do not believe this fundraising is a foregone conclusion, so we believe that Credit Suisse is worth brave investors buying at the current level In terms of liquidity level, Credit Suisse's liquidity coverage rate is191%Significantly higher than most industry peers. This ratio reflects the amount of highly liquid financial assets held by the bank, which can be used to fulfill short-term obligations. From our perspective, based on the company's financial situation at the end of the second quarter, we believe that Credit Suisse's capital and liquidity situation is healthy(JPMorgan)Analyst Kean Abu Hussein(Kian Abouhossein)express. As of Monday's close, the reassuring messages from analysts seemed to have calmed the bank's shareholders, despite increasing calls for the bank to announce its new strategic plan in advance. At the close of the Zurich market, Credit Suisse's stock price had roughly rebounded to4The daily opening price of Swiss francs. Meanwhile, in Australia, the Australian Broadcasting Corporation, which posted a widely circulated tweet last Saturday suggesting that a large international investment bank was "on the brink of collapse"(ABC)The financial journalist deleted his post, and his employer stated that he had been reminded to comply with the company's social media guidelines. |
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