March 28, 2023

Credit Suisse crisis: “It was left to invest in madness”

THE credit bank plunged more than 30% to historic lows and is now in danger of collapsing. The Swiss government is under pressure to intervene and the Swiss National Bank has announced it is available to help if needed. José Gomes Ferreira explains that the bank, due to its size, carries systemic risks and argues that it “cannot fall”, in the sense of liquidation in a disorderly manner, because it gathers many depositors and investors.

“Something will be done”

What are Credit Suisse’s paths now? The Swiss Central Bank can lend almost unlimited money until the company intervenes. This local banking authority may decide to a solving and “cutting out the most complicated part”, which is investment banking, “to save part of the deposits and commercial banking”, considers José Gomes Ferreira.

There is one systemic riski.e. risk of contaminating the European and even the global banking system. Its possibility Another default could also lead the European Central Bank to delay or moderate rate hikes scheduled for this Thursday.

Problems that led to the banking crisis

From the point of view of Gomes Ferreira, the The Swiss bank was “poorly regulated”.

“Credit Suisse is a bank that has been touted for years as a bank subject to money laundering”says José Gomes Ferreira, clarifying that the origin of the money “was not well supervised”.

In addition, there was also a bets on “high risk products, which were not controlled by the regulatory authority’.

“In the case of Switzerland, he allowed himself to invest in madness. What happens when there is a general rise in interest rates on both sides of the Atlantic? Investors are taking risk products and will be able to invest in safer products,” he says.

Gomes Ferreira emphasizes that Credit Suisse had “a 40% flight in deposits in the last quarter, 140 billion Swiss francs, and 15% of assets under management disappeared.”

Two levels of analysis

In Jornal da Noite, José Gomes Ferreira establishes two levels of analysis.

The bank was founded “off-market” “that are not regulated with other European investment banks.

AndA generalized increase in interest rates by central banks affects those banks that have risky products, which have never been resolved and affect other “seemingly more solid” European banks in the medium and long term.

“The pressure of rising interest rates could lead to a generalized economic crisis,” concludes Gome Ferreira.

explains that The more interest rates rise, the more fragile the bank becomes.

Can the Portuguese rest in peace?

The Portuguese reality of supervision of banks is different from the American one, it is much safer.

its meter Supervision mainly covers large banks, but small and medium-sized ones are also on the radar, assures Gomes Ferreira.

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