1:52 a.m. ET, March 16, 2023
Why are people worrying about Credit Suisse? The bank is “systemically important”
(Stefan Wermuth/Bloomberg/Getty Images)
It’s hard to overstate how big of a deal it would be for Credit Suisse — with its half-a-trillion dollars in assets and more than 50,000 employees around the world — to collapse.
Credit Suisse, one the largest lenders in Europe, is “much more globally interconnected, with multiple subsidiaries outside Switzerland, including in the US,” wrote Andrew Kenningham, chief Europe economist at Capital Economics.
Credit Suisse is not just a Swiss problem but a global one.”
Credit Suisse is known as a “global systemically important bank,” (or “G-SIB,” as the cool kids call it).
Once one of those mega-banks is in trouble, people start to wonder what’s going on with the system and speculate about who might be the next to fall.
Even with a financial lifeline from Swiss authorities, there are still plenty of risks and unknowns radiating out from Credit Suisse, keeping investors on edge.
Credit Suisse turmoil indicates the crisis has not been contained, according to Arthur Wilmarth, professor at the George Washington School of Law.
“I think it was naive for most people to think that it might be contained just with a couple of regional banks, because clearly there are still shocks reverberating within our own banking system,” Wilmarth said. “And this would indicate that it could potentially spread to banks of a very large size.”