The crisis at Credit Suisse and Deutsche Bank left its mark on money markets in the first week of the new year. The share prices of Credit Suisse and Deutsche Bank, which together manage $1.5 trillion in assets, fell. In 2022, the decline in stock value reached 60 percent. These changes in the markets raised the question of whether there was a new banking crisis in Europe.
The Process Began With The Energy Crisis
After the sanctions imposed by European countries in response to Russia’s invasion of Ukraine, European countries struggling with the energy crisis are facing a new disaster. When world stock markets plunged in 2022 in response to aggressive interest rate cuts by central banks, a new dispute erupted the following week between Credit Suisse and Deutsche Bank. As shares of Swiss investment bank Credit Suisse and German investment bank Deutsche Bank fell, there was talk of the possibility of a second Lehman Brothers crisis.
Shares Fell By Half
The share price of Credit Suisse, which manages $1.5 trillion in assets, fell from $14.90 in February 2021 to $3.50 in October 2021, and the 14-year CDS hit its highest level since 2008 in September 2022, when Lehman Brothers collapsed.
Deutsche Bank shares also fell from their post-crisis high of 45 euros in 2008 to 7.65 euros. This morning, the share price fell 9 percent. This shows that losses for 2022 have reached 60 percent.
Item On The Agenda Of The Fed Meetıng
While Credit Suisse CEO Ulrich Koerner warned that the bank is in a very dangerous situation, some market observers claim to have learned from reliable sources that one of Europe’s leading investment banks is in serious trouble. Koerner said the balance sheet of the bank, which is preparing for restructuring, is in good shape.
Both banks are systemically important financial institutions (SIFIs), sometimes referred to as “too big to fail.” The situation of European banks, which many observers link to the collapse of Lehman Brothers, the symbol of the 2009 financial crisis, is expected to be one of the main topics at the Oct. 3 meeting of Fed officials.
Although there is a widespread belief that a serious crisis is imminent, it is too early to make a clear judgment. It would be best to watch this process for a while and then decide what steps to take.
