Credit Suisse – one of the largest banks in the world and the # 2 Swiss bank – is rumored to be in a deep crisis. We have heard numerous speculations about the bank’s problems over the last few months. Rumors have been spreading in political and business circles.
The main issue is that the bank is currently fighting for its survival. Investors are about to experience the same shock as it was back in 2008 when the U.S. bank Lehman Brothers announced bankruptcy. As a result, the country witnessed one of the most severe economic crises since the Great Depression.
As one of the biggest banks across the globe, Credit Suisse boasted a $22.3 billion capitalization a year ago. Today, the market value has become twice lower dropping to $10.4 billion. What’s more, bank shares have also seen a severe decrease featuring a 56.2% decline in only one year.
Credit Suisse is also known for its proprietary-asset trading that provides access to major trading instruments like futures, cash treasury, precious metals, and so on. It is not just the bank to have problems but also traders who joined the platform can lose their capital.
The crisis resulted in several crucial investment mistakes. They led to several successive scandals and billions of dollars lost for the bank.
One of them involved Credit Suisse abandoning Greensill after doubts about its real value. The bank had $10 billion invested in products. As a result, Greensill had to announce bankruptcy.
Several other scandals took place one after another boosting speculations about the bank’s deepening crisis.
The Board tries to assure investors there is no threat to them. Even rapidly declining stock prices do not harm the company’s financial health. Day-to-day stock performance does not reflect the real situation, as the bank is believed to have a strong capital base.
It seems like Credit Suisse will be reshaped to meet investors’ and owners’ long-term expectations. However, it is a signal for investors they might look for some more reliable assets. Experts have already warned traders to avoid European instruments in the near future.
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