1:52 am ET, March 16, 2023
Why do people care about Credit Suisse? Bank “systematically important”
From CNN’s Alison Morrow
(Stephen Wermuth/Bloomberg/Getty Images)
It’s hard to overstate how big of a deal it would be for Credit Suisse — with its half-trillion dollars in assets and more than 50,000 employees worldwide — to collapse.
Failed last week Silicon Valley Bank and SignatureTwo small regional lenders have shaken the confidence of investors around the world.
Credit Suisse, Europe’s largest lender, is “globally interconnected with many subsidiaries outside of Switzerland, including in the US,” wrote Andrew Cunningham, chief European economist at Capital Economics.
Credit Suisse is not just a Swiss problem, but a global problem.
Credit Suisse is known as a “global systemically important bank” (or “G-SIP”, as the cool kids call it).
When one of those mega-banks gets into trouble, people start to wonder what’s going on with the system and speculate who will be the next to fall.
Despite funding from the Swiss authorities, numerous risks and unknowns emanate from Credit Suisse, keeping investors on edge.
According to Arthur Wilmart, a professor at George Washington Law School, the Credit Suisse turmoil indicates that the crisis is out of control.
“I think most people were naive to think that this would only be in a few regional banks, because the shocks are still reverberating through our own banking system,” Wilmarth said. “This would mean that this could spread to a very large number of banks.”