1:52 a.m. ET, March 16, 2023
Why are people concerned about Credit Suisse? The bank is “systemically important”
From CNN’s Allison Morrow
A Credit Suisse Group AG office building at night in Bern, Switzerland, on March 15.
(Stefan Wermuth/Bloomberg/Getty Images)
It’s hard to overstate how important it would be if Credit Suisse – with its half-trillion dollars in assets and more than 50,000 employees around the world – collapsed.
Last week’s bankruptcy of Silicon Valley Bank and Signature, two much smaller regional lenders, shook investor confidence around the world.
Credit Suisse, one of the largest lenders in Europe, is “much more globally connected, with multiple subsidiaries outside of Switzerland, including in the US,” wrote Andrew Kenningham, chief economist for Europe 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-SIB,” as the cool kids call it).
Once one of those mega banks is in trouble, people start to wonder what’s wrong with the system and speculate who’s going to fail next.
Even with a financial lifeline from Swiss authorities, there are still plenty of risks and unknowns emanating from Credit Suisse, leaving investors on edge.
According to Arthur Wilmarth, a professor at the George Washington School of Law, the unrest in Credit Suisse indicates that the crisis is not under control.
“I think it was naive for most people to think that it could only be contained with a few regional banks, because obviously there are still shocks in our own banking system,” Wilmarth said. “And this would indicate that it could potentially spread to banks of very large size.”