• Market strategist Greg Foss has warned that Credit Suisse will be the next major bank to collapse due to capital trouble and a run on the bank.
• The Swiss banking giant has also identified “material weaknesses” in its financial reporting controls, and its shares plunged after it failed to raise capital from its largest investor.
• Foss is currently executive director at Validus Power Corp and was previously a senior portfolio manager with a focus on credit strategies at Fiera Quantum, among other roles.
Credit Suisse Next to Collapse: Strategist Warns
Market strategist Greg Foss has predicted that Credit Suisse will be the next major bank to collapse, citing capital trouble and a run on the bank. The Swiss banking giant has also identified “material weaknesses” in its financial reporting controls. Its shares plunged on Wednesday after the bank failed to raise capital from its largest investor.
Greg Foss Shares Warning
Foss shared his warning about Credit Suisse’s impending collapse during an episode of Coin Stories podcast published Tuesday. Other recent collapses of U.S banks include Silicon Valley Bank and Signature Bank. At present, Foss is executive director at Validus Power Corp and was previously a senior portfolio manager with a focus on credit strategies at Fiera Quantum, among other roles. He said: “Credit Suisse is a systemically important financial institution and there’s a run on the bank…If CSFB [Credit Suisse First Boston] gets in trouble, it’s not just about CSFB, it’s about all the other institutions that have exposure or counterparty risks.” Credit Suisse is one of 30 global systemically important banks (G-SIBs) identified by Financial Stability Board (FSB), along with JPMorgan Chase, Bank of America, Citigroup, HSBC, and Goldman Sachs.
Reason Behind Potential Collapse
When asked why he believes Credit Suisse will be next major bank to fall, Foss explained: Because it’s in big capital trouble…It’s only got a 10-billion-dollar market cap for about a trillion dollars of assets which is ridiculously low.” He further elaborated that wealth division of Credit Suisses is losing assets quickly which could potentially pose serious problems for profitability of this huge banking institution as well as all other entities having exposure or counterparty risks linked with CSFB (Credit Suisse First Boston).
In 1988 Credit Suisse acquired First Boston – an investment banking company – which might have caused additional problems for this Swiss banking giant now as they need more liquidity than ever before due to their current situation as pointed out by Greg Foss’ warning.
The fate of Credit Suite remains uncertain but if Greg Foss’ prediction turns out to be true then not only will this huge Swiss Banking giant suffer major losses but so will many others who are linked with CSFB either through exposure or counterparty risk related activities