Credit Suisse Collapse

Switzerland's second largest bank Credit Suisse is now becoming the scrap of history. It is sad because Swiss bank had been famous for its prestige private banking operation in the world. The bailout from the Swiss government in pulling UBS to takeover Credit Suisse (well they don't admit it is a bailout) is now causing more trouble down the line. As Swiss government facilitated the bailout that required Credit Suisse to write off its $US 17 Billion AT1 bond (Additional Tier 1 or Hybrid bond that is convertable to Bank's equity). This is really wiping off the presitage name of Swiss bank for being the world's most trusted and secured. The Swiss government just did that for $17 billion, it is really a surprise and reflection of their incompetence. It is like adding oil to fire. This is causing further confidence shaking to the market especially the corporate bond market, when the bailout is suppose to calm the market's uneasiness. When you think investing in a top bank is the safest way...Poof...total loss of your money....An action from the Swiss government that sounds like communism.

Corporate finance practice taught us that debt should have priority over equity in money recovery when a company face bankruptcy. In this case Credit Suisse's equity holders get $30 billion back from the UBS acquitsition but none for AT1 bond holders.

This is causing investors to run away for Crypto and other safer assets like US treasury. Bitcoin is on the rise.

This turmoil is yet to fan out further negative sentiment.