3Yr·

What do you think, will Credit Suisse go bankrupt? I don't know much about banks and how to value them, I just know that you have to value banks differently in general. Almost 95% debt is terrible. Or is that normal for banks? I wouldn't buy the stock, even though the price is really tempting. But since I'm not familiar with it, I'd rather leave it alone. That's what Peter Lynch and Warren Buffett say. But I'd be really interested to know what you think about CS😁.

14 Comments

Jonas 🕊️@TheAccountant89

3Yr

Very risky. Management has been rather poor in the past. However, the high debt ratio is normal for banks. This is in the nature of things, as they generally finance themselves via the central banks (in the case of CS, this tends to be the SNB). Banks pass on the interest rate set by central banks directly to customers, with a markup, in order to profit themselves. This is the basic business of every credit bank. With regard to debt capital structure, there are guidelines called "Basel III", which prescribe how much equity capital banks must have as a minimum. In the course of the financial crisis, this ratio was increased again. So the criticism regarding the capital structure does not come out of the blue.

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Danny@Dannys

3Yr

@TheAccountant89 Management has been replaced. All "legacy issues" at the moment. Essentially, it's about the CDS spread. But I think looking at a single key figure is a bit thin, especially for a bank.
I agree with you that it is very risky. But the risk of bankruptcy is still quite manageable. I see the opportunities there just as much as the risks

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Schweizer_Investor🇨🇭@Alumdria

3Yr

Sparkojote has made a video about it. CS is so systemically important that the state would probably intervene to save it. But that would probably also mean that we Swiss taxpayers would have to foot the bill. The other alternative would be that it would go bankrupt, but then there would be a domino effect and other banks would be dragged down with it. That would probably be the start of a financial crisis like the one in 2008😒 https://youtu.be/AgT_LKWH-ck

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Jonas 🕊️@TheAccountant89

3Yr

@Kkfknrr Yes, of course. In an emergency, it will be rescued somehow. But it's definitely not an investment for me.

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Schweizer_Investor🇨🇭@Alumdria

3Yr

@TheAccountant89 not for me either. I'm not familiar with the industry either. As the saying goes: "Don't invest in companies whose business models you don't know"😁

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Danny@Dannys

3Yr

@TheAccountant89 not really for me either. But for some reason, my fingers are still itching at the moment😅😂

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Danny@Dannys

3Yr

@TheAccountant89 and IF they need to be rescued, the SNB will almost certainly be there to help Dieter. Why do they have difficulties getting rid of all their money🤣

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Paketknecht@Paketknecht

3Yr

The long-term chart of credit suisse is really scary, since 15 years in an unbroken downward trend.

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Rüdi@Jubele

3Yr

The price of the credit default swaps on Credit Suisse is also really scary. That can almost only burst

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Danny@Dannys

3Yr

@Yusake It doesn't look pretty. But it's still nowhere near the critical range. take a look at the cds from Coca-Cola

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Kay 🍀.@EurieNet

3Yr

I believe that when push comes to shove, they will have to be bailed out, either by the central bank or by the government. The critical questions then is actually how this will affect inflation and interest rate decision. I think it's good that you bring this up here, in fact it's so important that every 2nd post here should be about it.

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DiFigiANo@DiFigiANo

3Yr

@EurieNet The ECB has nothing to do with this
It's Switzerland 🇨🇭

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Marcus@Patlok

3Yr

Will not happen, because a bankruptcy of this major bank would trigger a catastrophic chain reaction. The state would intervene and save with newly created money. That's the fatal, banks can make mistakes and if that goes wrong, you are saved.

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Schweizer_Investor🇨🇭@Alumdria

3Yr

@Patlok It was the same with UBS in 2008 or 2009. They almost went bankrupt.

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