# Explainer-Credit Suisse: How did it get to crisis point?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-16
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Credit Suisse Struggles: Events Leading to Share Slump
Meta Description: Find out why Credit Suisse is borrowing $54 billion from Swiss central bank and if it will be sufficient amid share slump and global banking crisis fears.
URL: https://financedigest.com/explainer-credit-suisse-how-did-it-get-to-crisis-pointhtml

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By Anshuman Daga

(Reuters) – Credit Suisse said on Thursday it would borrow up to $54 billion from the Swiss central bank to shore up liquidity after a slump in its shares and bonds intensified fears about a global banking crisis. Analysts said they think that might not be enough.

WHAT EVENTS LED TO THE RECENT [SHARE SLUMP](https://www.financedigest.com/ubisoft-shares-slump-20-after-french-video-game-maker-warns-on-revenue.html "Ubisoft shares slump 20% after French video game maker warns on revenue")?

A string of scandals over many years, top management changes, multi-billion [dollar losses](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down") and an uninspiring strategy can be blamed for the mess that the 167-year-old Swiss lender now finds itself in.

The sell-off in [Credit Suisse’s](https://www.financedigest.com/mitsubishi-ufj-to-postpone-at1-bond-issuance-in-credit-suisse-fallout.html "Mitsubishi UFJ to postpone AT1 bond issuance in Credit Suisse fallout") shares began in 2021, triggered by losses associated with the collapse of investment fund Archegos and Greensill Capital.

In January 2022, Antonio Horta-Osorio resigned as chairman for breaching COVID-19 rules, just eight months after he was hired to [fix the ailing bank](https://www.financedigest.com/what-happens-next-how-to-fix-it-in-banking-in-2019.html "What happens next – how to fix IT in banking in 2019").

In July, new [CEO and restructuring expert Ulrich Koerner unveiled a strategic review – but failed to win over investors](https://www.financedigest.com/bayer-hits-8-month-high-as-investors-welcome-ceo-change.html "Bayer hits 8-month high as investors welcome CEO change").

An unsubstantiated rumour on an impending failure of the [bank in the autumn sent customers](https://www.financedigest.com/christmas-debt-hangovers-how-banks-can-help-customers.html "CHRISTMAS DEBT HANGOVERS: HOW BANKS CAN HELP CUSTOMERS") fleeing.

Credit Suisse confirmed last month that clients had pulled 110 billion Swiss francs of funds in the fourth quarter while the [bank suffered its biggest annual loss of 7.29 billion Swiss francs since the financial crisis](https://www.financedigest.com/how-the-2023-banking-crisis-unfolded.html "How the 2023 banking crisis unfolded"). In December, [Credit Suisse had tapped investors for 4 billion Swiss francs](https://www.financedigest.com/swiss-franc-grapples-with-safe-haven-identity-crisis-after-credit-suisse.html "Swiss franc grapples with safe-haven identity crisis after Credit Suisse").

On Wednesday, Saudi National Bank, the bank’s top backer, told [reporters it could not give more money to the bank as it was constrained by regulatory](https://www.financedigest.com/how-banks-can-avoid-regulatory-reporting-mistakes-with-a-good-dose-of-automation.html "HOW BANKS CAN AVOID REGULATORY REPORTING MISTAKES WITH A GOOD DOSE OF AUTOMATION") hurdles, while saying it was happy with the bank’s turnaround plan.

The shares have lost 75% over the [past one year](https://www.financedigest.com/big-banks-want-survive-past-next-10-years-need-adapt.html "If the big banks want to survive past the next 10 years, they need to adapt").

(Graphic: [Credit Suisse](https://www.financedigest.com/some-credit-suisse-at1-bondholders-seek-legal-advice-law-firms.html "Some Credit Suisse AT1 bondholders seek legal advice -law firms") and its problems – https://www.reuters.com/graphics/CREDITSUISSEGP-STOCKS/akveqegdgvr/chart.png)

![](https://www.globalbankingandfinance.com/wp-content/uploads/2023/03/14.jpg)

WHAT STEPS CAN [CREDIT SUISSE](https://www.financedigest.com/ubs-makes-changes-to-buyback-programme-following-credit-suisse-takeover.html "UBS makes changes to buyback programme following Credit Suisse takeover") TAKE TO CALM INVESTORS?

Credit Suisse has said it would borrow up to $54 [billion to shore up liquidity and investor confidence but some analysts believe that is unlikely to be enough to soothe](https://www.financedigest.com/gsk-bets-2-billion-on-bellus-cough-drug-to-soothe-pipeline-fears.html "GSK bets  billion on Bellus cough drug to soothe pipeline fears") investors.

Winning the [backing of strategic investors could be one option](https://www.financedigest.com/3-options-to-consider-when-you-owe-the-irs-back-taxes.html "3 Options to Consider When You Owe The IRS Back Taxes") to shore up market confidence. It counts Qatar [Investment Authority and Saudi conglomerate Oyalan Group among its investors](https://www.financedigest.com/investment-inspection-trips-bring-liverpool-to-life-for-asian-property-investors.html "Investment Inspection Trips bring Liverpool to life for Asian property investors").

In the early days of the global financial crisis in 2008, UBS took on Singapore sovereign [wealth fund](https://www.financedigest.com/norway-wealth-fund-employee-sues-for-workplace-gender-discrimination.html "Norway wealth fund employee sues for workplace gender discrimination") GIC as an investor but the stake sell-down ultimately resulted in a loss for GIC.

Divesting stakes in various assets is an option as Credit [Suisse owns an asset management](https://www.financedigest.com/analysis-credit-suisse-collapse-threatens-switzerlands-wealth-management-crown.html "Analysis-Credit Suisse collapse threatens Switzerland’s wealth management crown") business and a stake in SIX Group, which runs the Zurich stock exchange.

Credit Suisse has pivoted to a strategy to cater to rich clients while cutting [back on its volatile investment banking](https://www.financedigest.com/bank-of-englands-mann-doubles-down-on-backing-for-rate-hikes.html "Bank of England’s Mann doubles down on backing for rate hikes") business and has already announced plans to spin it off.

HOW IMPORTANT IS [CREDIT SUISSE](https://www.financedigest.com/credit-suisse-offers-higher-deposit-rates-in-asia-to-woo-the-wealthy-sources.html "Credit Suisse offers higher deposit rates in Asia to woo the wealthy – sources")?

The bank ranks among the world’s largest [wealth managers](https://www.financedigest.com/wealth-management-consultant.html "Wealth management consultant") and crucially it is one of 30 global systemically important banks, whose failure would cause ripples through the entire financial system.

[Credit Suisse has a local Swiss bank](https://www.financedigest.com/credit-suisse-54-billion-lifeline-offers-limited-respite-to-global-banks.html "Credit Suisse  billion lifeline offers limited respite to global banks"), wealth management, investment banking and asset management operations. It has just over 50,000 employees and 1.6 trillion Swiss francs in [assets under management](https://www.financedigest.com/britains-post-brexit-asset-management-revamp-eyes-liquidity-tokenisation.html "Britain’s post-Brexit asset management revamp eyes liquidity, tokenisation") at the end of 2021.

With more than 150 offices in around 50 countries, [Credit Suisse is the private bank](https://www.financedigest.com/bank-shares-rise-after-credit-suisse-rescue-eases-crisis.html "Bank shares rise after Credit Suisse rescue eases crisis") for a large number of entrepreneurs, rich and ultra rich individuals and companies.

(Reporting by Anshuman Daga and Swiss bureau; Editing by Sumeet Chatterjee, Elisa Martinuzzi and Elaine Hardcastle)


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