Credit Suisse (CS), the leading financial services company in Switzerland, is making headlines again, but for the wrong reasons. Several large private banking clients have reportedly withdrawn funds from CS due to the current state of the Swiss lender. According to a Bloomberg report, wealthy families in Asia and the Middle East are withdrawing hundreds of millions of dollars.
Will this have a negative impact on crypto? Here’s what you need to know.
Please Don’t Leave!
The report showed that some clients in Singapore and the Middle East requested to withdraw cash or shift assets worth tens of millions of dollars or more. One client family that pulled cash out was told that a queue of unprocessed transactions had resulted in backlogs.
Bankers at rival firms are apparently taking advantage of the concerns. A spokesperson at Credit Suisse tried to provide reassurance saying, “We are in close contact with our clients as we are working on the strategic review.”
Credit Suisse private bankers have advised clients to invest in short-dated US treasury bills that limit exposure and move assets to third-party fiduciaries.
Has Credit Suisse Hit Rock Bottom?
Credit Suisse is undergoing several challenges, including doubt as to whether it will be able to finance the restructuring of its investment bank. The step is expected to be announced at the end of October when third-quarter results are released.
As of June 2022, the bank managed about $770 billion for wealthy clients. The bank’s balance sheet early last week showed that credit default swap spreads had spiked as high as 355 basis points.
Credit Suisse bought back $3 billion on its own debt on Friday, probably alleviating some of those concerns. The move signaled that the bank was cutting its future interest expenses. It also showed that they had the necessary capital strength to buy back the bonds.
The frantic maneuvering highlights the need for CEO Ulrich Koerner to finalize the restructuring that has been going on for over two months.
In a reassuring memo to staff, Koerner said that the bank’s health was unfounded. “I trust that you are not confusing our day-to-day stock price performance with the strong capital base and liquidity position of the bank,” he wrote.
What Does a Credit Suisse Plunge Mean For Crypto?
As stock prices for Credit Suisse dropped nearly 10% early this month, crypto assets also saw their prices drop slightly.
According to CoinMarketCap, Bitcoin recorded a 0.59% drop in price, while Ethereum recorded a 1.69% drop. This suggests that the crypto market is not too affected by the Swiss Bank’s challenges.
Central banks are not quite to blame for the escalating situation in traditional financial markets. Instead, the effects of the pandemic, war, and other macroeconomic factors have created the problem of high inflation.
Despite this, crypto markets continue thriving, indicating that they are not heavily influenced by what is happening in financial markets.
Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.