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Is Credit Suisse the next to strike down?

Robert Kiyosaki analyses Credit Suisse would be the next to crash.

Credit Suisse Group AG is a global investment bank and financial service provider that is based in Zürich, Switzerland.

Robert Kiyosaki, author of “Rich Dad, Poor Dad.” published in 1997, an American entrepreneur and Businessman revealed what he believes would be the next Bank to reach beggary. He is the founder of Rich Global LLC and the Rich Dad Company, a private financial education company that provides personal finance and education to people. The eminent investor and analyst who had even predicted the Lehman Brothers fall also exclaimed that the next Bank to see would be Credit Suisse. In his words, he proclaimed

“I think the next bank to go is Credit Suisse because the bond market is crashing.”

Robert further elaborates that the issues arising in the Bond Market might cause the U.S. dollar to lose its value. “The U.S. dollar is losing its hegemony in the world right now. So they’re going to print more and more and more of this,” he says as he holds a dollar bill.

Kiyosaki believes that the SVB’s demise was due to poor asset allocation and lack of regulatory insight, which was similar to the case of the Lehman brothers. The government’s intervention after the fact will only further the problem and ultimately damage taxpayers, he predicts. Kiyosaki also advises thinking smart and focusing on investments in gold and silver, with the market being volatile as of recent events.

The closure of Signature Bank, founded in 2001 in New York and dealing with Crypto companies, was connected to the Silicon Valley Bank’s recent crash. Federal Regulators added that it shut down to protect consumers and the financial system. The institution provided deposit services for its clients’ digital assets but did not make loans collateralized by them. Even though the Bank was reputed and served its client with a strong repo, it was subjected to vigorous testing and regulations because it reached $100 billion in assets. The main reason for the issue is the Bond Prices which, when they fall, are due to the rising interest rates.

Credit Suisse:

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It is referred to as Credit Suisse Group AG and is a global investment bank and financial service provider based in Zürich, Switzerland.

“We build lasting value by serving our clients with care and entrepreneurial spirit” is the primary purpose of Credit Suisse Bank; it focuses on inclusion, meritocracy, their clients, and so many more, but the main emphasis is on trust.

The banks’ system was so tight-willed that it is known for its secrecy and bank-client congeniality. It was one of the least affected companies during the Great Recession. During the pandemic and with the increase in inflation, there was an announcement from the Bank that there would be reconstruction. It set out to reduce costs and improve overall efficiency, eventually altering some of the previous plans of the prior CEO, Thiam. Thomas believed that these initiatives would enable resilience in uncertain markets and deliver an upside when the economic conditions become more explicit.

Going back to Robert and how he predicted this was the result of the February 9, the Bank reported an annual loss of $7.3 billion, the most significant loss since the 2008 financial crisis. On March 15, it noted that its share price dropped over 25% after Saudi National Bank said it couldn’t provide financial assistance any more. The unsecured bonds set for 2027 dropped to 33 per cent of their par value that day. In the same year, a little down the line, the Bank sought to take a loan of 50 Billion Swiss Francs from Switzerland’s Central Bank. It was done to maintain the company’s stock price due to the liquidity.

Credit Suisse also has high exposure to bond assets, and that doesn’t help when you view the recent scandals and issues the Swiss Bank faced. Kiyosaki’s concern is still on the bond market, a key factor that brought down SVB. Before its closure, SVB held an extensive Treasury bond portfolio whose value had dropped so much in the past year that it couldn’t help the company recover when it had to be sold.

Only building to the problem, it said on March 14 that it lost over $8 billion due to client withdrawals, and this alarming report sent a shock that made it revisit its financial statements. The Bank said its “internal control over financial reporting was ineffective because it failed to identify potential risks to financial statements adequately”. Its shares fell 2 per cent following the earnings release.

With the unstable economy and the recent crashes, Credit Suisse should be on the lookout and re-evaluate reports which the Bank said are “materially different and higher standards when it comes to capital funding, liquidity and so on.”