{"id":33989,"date":"2023-03-17T05:21:00","date_gmt":"2023-03-16T23:51:00","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=33989"},"modified":"2025-04-20T03:30:05","modified_gmt":"2025-04-19T22:00:05","slug":"the-credit-suisse-lifeline-and-its-impact","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/the-credit-suisse-lifeline-and-its-impact\/","title":{"rendered":"The Credit Suisse lifeline and its impact"},"content":{"rendered":"<p>&nbsp;<\/p>\n<h3><strong>What\u2019s in today\u2019s article?<\/strong><\/h3>\n<ul>\n<li><strong>Why in News?<\/strong><\/li>\n<li><strong>What is Credit Suisse?<\/strong><\/li>\n<li><strong>What is the Link between India and Credit Suisse?<\/strong><\/li>\n<li><strong>News Summary Regarding Troubles at Credit Suisse<\/strong><\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>Why in News?<\/strong><\/h2>\n<ul>\n<li>The Swiss central bank stepped in with a $54 billion lifeline for Credit Suisse after a continuing slide in the lender\u2019s shares triggered growing concerns about a developing bank deposit crisis.<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>What is Credit Suisse?<\/strong><\/h2>\n<ul>\n<li>It is a <strong>global investment bank and financial services firm<\/strong> founded (1856) and based in (Zurich) Switzerland.<\/li>\n<li>It maintains <strong>offices in all major financial centers<\/strong> around the world and is one of the nine global &#8220;<strong>bulge bracket<\/strong>&#8221; banks providing services in investment banking, private banking, asset management, and shared services.\n<ul>\n<li><strong>Bulge bracket banks<\/strong> (no definitive list) are the world&#8217;s largest multinational investment banks, serving mostly large corporations, institutional investors and governments.<\/li>\n<\/ul>\n<\/li>\n<li>It is known for <strong>strict bank-client confidentiality and banking secrecy<\/strong> and recognised as a global systemically important bank (G-SIB) by the Financial Stability Board (FSB).<\/li>\n<li>Credit Suisse has had<strong> a troubled history<\/strong>, having braced multiple scandals in recent years over different issues, including money laundering charges.<\/li>\n<li>It reported having lost money in the last two years and<strong> had issued a warning of staying in the red at least till 2024<\/strong>, triggered concerns about the health of Europe\u2019s banking sector and a <strong>contagion effect.<\/strong><\/li>\n<li>The new crisis (SVB failure) could mean <strong>a longer road towards profitability<\/strong> or even solvency, for the embattled bank.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<figure class=\"media\">\n<div data-oembed-url=\"https:\/\/www.youtube.com\/watch?v=bpfiOjVO3WM\">\n<div><iframe src=\"https:\/\/www.youtube.com\/embed\/bpfiOjVO3WM\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/div>\n<\/div>\n<\/figure>\n<p>&nbsp;<\/p>\n<h2><strong>What is the Link between India and Credit Suisse?<\/strong><\/h2>\n<ul>\n<li>Established in India in <strong>1997<\/strong>, Credit Suisse has offices in Mumbai, Pune and Gurgaon, with vendor offices in Bangalore, Hyderabad and Kolkata.<\/li>\n<li>India represents the <strong>second-largest footprint<\/strong> for Credit Suisse outside of Switzerland and India is an important recruitment centre for the bank globally.<\/li>\n<li><strong>A deepening banking crisis<\/strong> in the US or the EU could mean fresh troubles for lenders in other geographies, including India.<\/li>\n<li>Therefore, a lifeline to Credit Suisse is good news for India <strong>as there could be a cascading impact of global regulatory action<\/strong> (pause in the ratings hikes) that would have a bearing on the RBI\u2019s stance on market rates and outlook for the markets.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>News Summary Regarding Troubles at Credit Suisse:<\/strong><\/h2>\n<p><img decoding=\"async\" src=\"https:\/\/vajiramandravi-test.s3.us-east-1.amazonaws.com\/media\/content\/ckeditor\/2023\/03\/23\/image-20230323143432-1.png\" alt=\"\" \/><\/p>\n<p>Image Caption: The Credit Suisse lifeline and its impact<\/p>\n<ul>\n<li>The shares of Credit Suisse plunged to a fresh<strong> all-time low<\/strong> after a top investor in the embattled lender said it would not be in a position to provide more cash due to regulatory red lines.<\/li>\n<li>The Swiss regulators said that Credit Suisse currently meets capital and liquidity requirements and that <strong>the Swiss National Bank will provide additional liquidity<\/strong>, if needed.<\/li>\n<li>This came at a time when there was a <strong>concern of a spiralling banking sector crisis<\/strong>.<\/li>\n<li>The lifeline is extremely significant as Credit Suisse would be the <strong>first major global bank to be given such a credit line since the 2008 financial crisis<\/strong>.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3><strong>Q1) What are Global systemically important banks (G-SIBs)?<\/strong><\/h3>\n<p>A G-SIB is a bank whose systemic risk profile is deemed to be of such importance that the bank\u2019s failure would trigger a wider financial crisis and threaten the global economy. The Basel Committee has developed a formula for determining which banks are G-Sibs, deploying criteria including size, interconnectedness and complexity.<\/p>\n<p>&nbsp;<\/p>\n<h3><strong>Q2) What is investment banking?<\/strong><\/h3>\n<p>Investment banking pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments.<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<p><strong>Source:\u00a0<\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/credit-suisse-lifeline-impact-explained-8500515\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>The Credit Suisse lifeline and its impact<\/u><\/a>\u00a0|\u00a0<a href=\"https:\/\/www.thehindu.com\/business\/credit-suisses-54-bln-lifeline-gives-global-banks-tentative-respite\/article66627509.ece\" target=\"_blank\" rel=\"nofollow noopener\"><u>TH<\/u><\/a>\u00a0|\u00a0<a href=\"https:\/\/economictimes.indiatimes.com\/industry\/banking\/finance\/banking\/rbi-keeps-close-watch-on-credit-suisse-crisis\/articleshow\/98718710.cms\" target=\"_blank\" rel=\"nofollow noopener\"><u>ET<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Credit Suisse is a global investment bank and financial services firm founded (1856) and based in (Zurich) Switzerland<\/p>\n","protected":false},"author":5,"featured_media":33990,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-33989","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/33989","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=33989"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/33989\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/33990"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=33989"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=33989"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=33989"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}