OPINION: Speculation that Credit Suisse is to this crisis what Lehman Bros was to the financial crisis has got completely out of control, thanks to fearful markets and social media.
New chief executive Ulrich Koerner is in full turnaround mode and has promised the market he will announce a turnaround strategy on October 27, one that is likely to involve asset sales, massive job cuts and, according to German analyst firm KBW, a capital raising of as much as $US4 billion that would be hugely dilutive to long-term shareholders.
Things have only escalated from there, helped by a tweet from an Australian. On Saturday night, ABC journalist David Taylor tweeted: “Credible source tells me a major international investment bank is on the brink.” For example, in a tweet thread posted on Sunday night, Graham Stephan, a Las Vegas-based business YouTuber with four million followers, reported that, “most of the recent interest [in Credit Suisse] arose due to a story from ABC Australia, which reported ominously that “a major international investment bank is on the brink”.Advertisement
And CDS spreads on its debt, while elevated, are still a fair way from distressed, and also need to be seen in the context of a widening of CDS spreads across global bond markets.struggles at Deutsche Bank over the past six years