If Credit Suisse implodes, it will be far worse than the SVB collapse – the European economy will fall off a cliff
By ethanh // 2023-03-16
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It is looking increasingly likely that Swiss banking giant Credit Suisse will be the next big bank to fall, in which case the European economy will fall off a cliff, according to Bloomberg Markets Live reporter and strategist Ven Ram. Europe will be the first to feel what Ram ominously described as an upending of the global financial system, resulting in major central banks bringing their policy tightening "to a screaming halt." "Unlike Silicon Valley Bank and Signature Bank, the Swiss lender is classified as systemically important by the U.S. Financial Stability Board – meaning it's too big to fail as a collapse has the potential to trigger a financial crisis," Ram explained. On Wednesday, March 15, European Central Bank officials made contact with lenders to ask about their financial exposure to Credit Suisse. The bank reported that its assets under manage are nearly 1.3 trillion Swiss francs, or the United States equivalent of around $1.4 trillion. This amounts to nearly 10 percent of the 14.5 trillion euro-area economy. This announcement resulted in an immediate spike in Credit Suisse's 1yr Sr CDS, which represent the cost of insuring the bank's debt against default for another year, by a record 2,728 basis points. Conversely, the company's shares tumble to a record low while its bonds plunged to levels that Ram said are "typically associated with distress." All of this occurred following comments made by Saudi National Bank, which is Credit Suisse's top shareholder. That bank announced that it has no intention of investing any more money into the Swiss lender, which is currently in the throes of a complex three-year restructuring that aims to return Credit Suisse back to profitability. (Related: Be sure to check out our earlier coverage about the financial "death spiral" that has been triggered following the collapse of SVB.)

Will bank failure contagion continue to spread?

Back in the United States, the Federal Reserve has been working overtime to quell fears about a banking collapse stateside following the implosion of Silicon Valley Bank (SVB) and numerous other mostly "woke" banks that have crashed and burned in recent days. The Fed unveiled a brand-new term-funding program in which banks can borrow against bonds that may have lost value at 100 cents on the dollar. This "backstop," as they are calling it, is presumably aimed at other struggling banks like SVB that sunk quickly after the Fed started raising interest rates. How this will all affect the European economy remains to be seen, especially after UBS Group AG chief executive officer Ralph Hamers refused to answer "hypothetical questions" about its Swiss rival. Instead, Hamers indicated, UBS is "focused on our own strategy." As for Credit Suisse, CEO Ulrich Koerner is begging for patience, claiming that the bank's CET1 capital ratio of 14.1 percent in the fourth quarter and a liquidity coverage ratio of 144 percent, which was since increased to about 150 percent on average, will be enough to bail the bank out of sinking sand. "For policymakers in Europe and the U.S., though, what is at stake here is an entity that has a far greater domino effect in its ability to damage sentiment than Silicon Valley Bank and Signature Bank combined," Ram said. In the comments, someone wrote the following analogy to describe how all this banking calamity is making him feel: "You know that weird feeling you get in your gut as the roller coaster crests the first hill and starts to drop down the other side? I just had that." The corrupt globalist banking empire is coming apart at the seams. To keep up with the latest, visit Collapse.news. Sources for this article include: ZeroHedge.com NaturalNews.com
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