One of the largest banks in the world could go bankrupt: Swiss credit. On Monday, the company’s credit risk gauge rose to a record high as its shares hit record lows, falling as much as 12% in Zurich trading. This year, the entity has reduced more than half of the shares, so it is already valued at less than 10,000 million dollars.
Ulrich Koerner, who was appointed CEO at the end of July this year, has tried to reassure employees and investors by highlighting the bank’s soundness and liquidity. However, the losses are becoming more and more evident, since as soon as operations reopened this Monday, investors rushed to sell.
Credit Suisse is not the only bank posting losses. On the DAX, the Deutsche Bank It is the title that descends the most, with a fall of approximately 4.4%. This has not been the only significant drop in the company, since in 2016 it went through another of its worst moments with a decrease of up to 8 percent.
“These banks have long been in a challenging landscape. The rise in interest rates globally, the war between russia and ukraineand the energy crisis, have deepened it”, assured Juan David Ballén, director of analysis and strategy at Casa de Bolsa.
These banks could become the next Lehman Brothers, entity that had to close operations in 2008 after declaring itself in financial insolvency with a liability of 430,000 million dollars, which generated one of the worst financial crises in the world: the great recession. The entity bet on the subprime mortgageswhich were delivered to poorly solvent clients in the midst of a corrupt scene that caused the renowned bank to lose 95% of its value on Wall Street.
A common denominator of the bankruptcies of most of the big ones is that they close before or during a major financial crisis, such as the case of Lehman Brothers in 2008 in the midst of the housing bubble, as well as in 1987, when the well-known “Black Monday” happened. ”, when the New York Stock Exchange (NYSE) collapsed due to the trade deficit, high inflation, the rise in interest rates by the world’s central banks and the war between Iran and Iraq. In that year, 184 entities had to close, including the Republic Bank Corporation of Dallas.
Financial crises usually happen when the financial system excessively relaxes its financial conditions or when risks are not adequately controlled and supervised,” added Ballén.
In 1990, one of the major African-American-led banks, Freedom National Bank, closed due to non-payment of loans.
Although not only in the North American country have large banks been closed. In the United Kingdom, Barings Brothers closed in 1995 after registering losses of 1,280 million dollars; while in Japan, the Long-Term Credit Bank had to cease in 1998, causing 141 companies to go bankrupt.
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