Swiss investment bank Credit Suisse is under the spotlight as American entrepreneur and author Robert Kiyosaki predicts that it will be the next bank to collapse, following the crisis at Silicon Valley Bank (SVB) and Signature Bank. The collapse of SVB has been marked as the largest American banking failure since the 2008 Lehman Brothers crash.
Kiyosaki claims that the problem lies with the bond market, and he predicted the collapse of Lehman Brothers years before it happened. With Credit Suisse now facing a slump in its shares, the bank has announced that it will borrow up to $54 billion from the Swiss central bank to shore up liquidity and investor confidence.
In an interview with fox business Kiyosaki said "The problem is the bond market, and my prediction, I called Lehman Brothers years ago, and I think the next bank to go is Credit Suisse, Because the bond market is crashing."
The collapse of Lehman Brothers in September 2008 marked the largest bankruptcy in history, with total debts of $613 billion against total assets of $639 billion and 25,000 employees worldwide. This was said to have surpassed that of Worldcom's and Enron's.
The crash of Silicon Valley Bank last week followed by Signature Bank two days later sent global bank stocks on a roller-coaster ride this week. Investors have been discounting assurances from US President Joe Biden and emergency steps giving banks access to more funding.
Credit Suisse is not the only bank facing a crisis. Last year, major banks such as JP Morgan, Goldman Sachs, and Deutsche Bank saw their shares plummet, with some analysts predicting a repeat of the 2008 financial crisis.
The COVID-19 pandemic has been a significant contributing factor to the economic downturn. Governments worldwide have introduced measures to contain the spread of the virus, including lockdowns and travel restrictions, leading to a decline in consumer demand and business activity.
In response, central banks have lowered interest rates, introduced quantitative easing, and injected trillions of dollars into the economy to stimulate growth. However, these measures have also led to an increase in debt levels, raising concerns about the stability of financial institutions.