Calm Before The Storm? Watch Out For Credit Suisse


Two taken care, one to go. London bridge is ‘not falling’ for now with the U.K. pinning hopes on the new Prime Minister Rishi Sunak. And, the global markets are adjusting to the fact that Fed will hike rates and remain hawkish at least till the onset of 2023. Yet, there is one more storm in the making—the Credit Suisse crisis.

The board of Credit Suisse is expected to meet on Thursday, Oct. 27 to chalk out a bailout plan. The trillion-dollar question: Can a repeat of Lehman be averted? There seems to be a semblance of hope as the 166-year-old institution pieces together various strategies to raise capital to stay afloat. It’s trying to sell parts of businesses, cut down investment banking business and strengthen wealth management. Analysts estimate the bank would need $9-10 billion to be able to do business and drive growth.

The CS stock had plunged to below $4 and recovered to around $4.7 during the last three weeks. The bank’s credit default swaps spread had hit a 14-year high earlier this month, reflecting the depth of the crisis.

Back home, Indian markets have remained strong led by banking stocks. Diwali has brought fresh cheer to the stock markets, backed by strong consumer spending. This display of resilience may continue but global headwinds could bring caution back on the street. A lot depends on how the financial markets ride this Credit Suisse storm.


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By BQ Desk