Credit Suisse is in a precarious situation with some analysts and pundits concerned that the company could be the next Lehman Brothers.
The Street shared the following in 2018, 10 years after Lehman Brothers went under.
While there may have been several reasons for the firm’s ultimate failure, it was caused in large part by the housing crisis in 2008.
The firm survived many of the world’s largest disasters, including two world wars, the Great Depression, and many crises. However, it was its over-leveraging and unwieldy venture into subprime lending that caused its ultimate downfall.
And while the firm itself was simply one of many factors contributing to the economic disaster that was 2008 and beyond, it was perhaps the catalyst of the collapse of the banking and housing industries, and proved that even those that boast enormous success one year can be bankrupt the next.
Over the weekend people started talking about Credit Suisse being the next Lehman Brothers.
Credit Suisse’s CEO tried to calm market fears with a letter to the company’s employees and investors but this backfired as the company’s stock fell as much as 12% on Monday.
Credit Suisse Group AG was plunged into fresh market turmoil after Chief Executive Officer Ulrich Koerner’s attempts to reassure employees and investors backfired, adding to uncertainty surrounding the bank.
The stock, which had already more than halved this year before Monday’s sell-off, fell as much as 12% in Zurich trading to a record low that values the firm at less than $10 billion. That was accompanied by a spike in the cost to insure the bank’s debt against default, which jumped to its highest ever.
Koerner, for the second time in as many weeks, had sought to calm employees and the markets with a memo late Friday stressing the bank’s liquidity and capital strength. Instead, it focused attention on the dramatic recent moves in the firm’s stock price and credit spreads, and investors rushed for the exit when trading reopened after the weekend.
Rebel Capitalist had the following to say about the current situation of the company.