(RightWing.org) – In last week’s fuss about the collapse of Silicon Valley Bank, a much bigger bank also hit the rocks with a lot less media attention. Credit Suisse, one of the key players in the global financial system, almost followed SBV down the tubes. Only a last-minute deal negotiated by the Swiss government saved it. Now the bank is claiming social media was behind its troubles.
A reporter asks Credit Suisse, $CS, Chairman Axel Lehmann: "Who is responsible for this disaster?
He says: "… last autumn we had a social media storm." pic.twitter.com/7gCy4RLm0k
— unusual_whales (@unusual_whales) March 20, 2023
On March 19, the Swiss government brokered a deal that saw UBS Group, Europe’s third-largest bank, take over Credit Suisse. The two banks have been rivals for years and formed a huge part of Switzerland’s secretive banking system. Credit Suisse has global reach; it has branches in every world financial center, and in the US, it trades directly with the Federal Reserve as a “primary dealer.” If it collapses, the impact would be enormous — and last week, it nearly did.
Last month Credit Suisse announced a $7.5 billion annual loss, its largest since the 2008 financial crisis. That provoked a collapse in its value, with the share price falling 70% in just two weeks. By March 19, the bank was within hours of failure. To avoid disaster, Swiss banking regulators negotiated a takeover by UBS Group, which will buy Credit Suisse for $3.2 billion. The battered bank is still operating, and its accounts are safe, but its independence is gone.
On March 20, Credit Suisse chairman Alex Lehmann claimed the bank’s problems were caused by “a social media storm” last fall. Lehmann has used this argument before, insisting that speculation on Twitter and Reddit last October about the bank’s finances had caused “really massive outflows” of capital. The reality is Credit Suisse shares peaked in 2007, and on September 29, 2022 — just before the “social media storm” — they hit a new record low. Lehmann tried to convince investors that social media attention was the cause of the bank’s decline; in reality, it was a symptom of it.
Copyright 2023, RightWing.org