Credit Suisse must boost depositors’ confidence to halt global concern
A top Thai fintech startup has warned that the world economy will suffer if financial giant Credit Suisse goes bankrupt.
Trawut Luangsomboon, CEO of Jitta Wealth Asset Management Co Ltd (AMC), said the Swiss National Bank (SNB) must find a solution to boost depositor confidence and ensure stability in the banking system and financial situation.
Jitta Wealth Asset Management is a Thai startup that manages significant private capital in Thailand.
Trawut noted that Switzerland's central bank on Thursday provided US$54 in liquidity to Credit Suisse, but added that the intervention may be complicated by the size of Credit Suisse’s assets, which require significant capital to run.
The bank reportedly manages assets worth 530 billion Swiss francs, equivalent to almost 19.6 trillion baht.
Credit Suisse suffered net losses of 1.626 billion Swiss francs in 2021 and 7.306 billion Swiss francs last year.
The bank's financial statements reveal that the total amount of deposits has decreased dramatically. Customer deposits fell from 393.841 billion Swiss francs in 2021 to 234.554 billion in 2022. A 40% drop in the value of deposits over the final three months of last year is another factor dampening investor optimism.
Trawut said risk from Credit Default Swaps (CDS) had triggered investors’ concern that Credit Suisse is a default risk.
The situation is similar to that faced by Morgan Stanley in 2008, but the US-based company prevailed and expanded to become one of the biggest banks in the world.
Credit Suisse still has an opportunity to overcome its difficulties, Trawut said, depending on how the bank and the regulator handle the situation.
On Wednesday, Credit Suisse shares plunged 24.24% to 1.55 Swiss francs after the Saudi National Bank refused to increase its stake following the collapse of Silicon Valley Bank (SVB). However, the shares recovered to 2.02 Swiss francs on Thursday following the intervention by SNB.
Previously, Credit Suisse had been hit by controversies over drug money laundering in Bulgaria, a corruption case in Mozambique, a former CEO espionage scandal, and client information leakage.