1:52 p.m. ET, March 16, 2023
Why are you worried about Credit Suisse? The bank is “systemically important”
From CNN’s Allison Morrow A office building of Credit Suisse Group AG at night in Bern, Switzerland, on March 15. (Stefan Wermuth/Bloomberg/Getty Images)
It’s hard to overstate the magnitude of the collapse of Credit Suisse, with its half trillion dollars in assets and more than 50,000 employees around the world.
The collapse of Silicon Valley Bank and Signature, two much smaller regional lenders, last week 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, it’s a global one.”
Credit Suisse is known as a “global systemically important bank” (or “G-SIB” as the cool kids call it).
As soon as one of these megabanks gets into trouble, people wonder what’s wrong with the system and speculate on who might fall next.
Even with a financial lifeline from the Swiss authorities, there are still many risks and unknowns emanating from Credit Suisse that are keeping investors on their toes.
The turmoil at Credit Suisse suggests the crisis has not been contained, according to Arthur Wilmarth, a professor at the George Washington School of Law.
“I think it was naive that most people thought it could be contained with just a few regional banks because clearly there are still shocks reverberating in our own banking system,” Wilmarth said. “And this would suggest that it could potentially spread to very large banks.”