Credit Suisse, a century-old investment bank, may be going bankrupt.

Spread thunderstorms in large investment banks.

The market guess is the century-old banking giant Credit Suisse.

Recently, there is a message going viral in foreign markets. David Taylor, a business journalist owned by the Australian Broadcasting Corporation (ABC), reported that a large investment bank is on the verge of bankruptcy according to "reliable sources".

The spread of the news has aroused heated discussion in financial circles, one of which is Credit Suisse (Credit Suisse).

Credit Suisse has been plagued by a series of scandals in recent years, including Archegos explosion, Greensill bankruptcy, leaks and so on, which have damaged the company's reputation and dragged down its performance. Its shares have been depressed since February last year, falling from $14.90 to $3.92 at Friday's close.

In addition, Credit Suisse's credit default swap index climbed to 250 basis points on Friday, close to the level seen when Lehman Brothers collapsed in 2008, according to Bloomberg. The higher the price of CDS default swaps, the greater the probability of default.

In a second memo sent to employees in a few weeks, Credit Suisse chief executive John Kerner acknowledged a lot of uncertainty and speculation inside and outside the bank, but called on employees not to confuse daily share price performance with the company's "strong capital base and liquidity position". But Lehman Brothers said something similar before it went bankrupt.

Mr Kohner said details of the transformation plan could not be shared before October 27, but said regular updates would be sent to employees until the results of the daily strategic review, requiring them to maintain discipline and maintain close contact with customers.

There were earlier media reports that Credit Suisse had drawn up plans to split its investment banking business into three parts, namely, the consulting business, which could be spun off at some point in the future, and bad banks, which hold risky assets that will be gradually liquidated; and the rest of the business. Credit Suisse wants to re-establish itself as a "light capital" investment bank focused on wealth management and banking.

Under a proposal submitted to the bank's board of directors, Credit Suisse wants to sell profit-making divisions such as securitised products, hoping to avoid damage to its financing capacity. The securitisation products business, which packages debt such as mortgages and then sells them as securities, will reduce the bank's capital liabilities, but it will also lose one of its most profitable businesses.

What happened to Credit Suisse?

In 2021, Credit Suisse suffered a double blow from the explosion of ArchegosCapital and the collapse of GreensillCapital, which cost the company billions of dollars and forced the departure of its head of investment banking and chief risk officer. In addition, Credit Suisse was found guilty in a lawsuit over money laundering for drug traffickers, becoming the first large bank in Swiss history to be found guilty in a criminal case.

Last year, the collapse of Archegos's highly leveraged bets on several stocks shocked Wall Street and triggered a regulatory investigation, with Credit Suisse bearing most of the losses. The losses led to Credit Suisse's worst year since the financial crisis, prompting a major management shake-up and a board reshuffle.

The fund said that "Credit Suisse suffered 5.5 billion dollars in losses as a result of the Archegos case alone, not to mention extensive damage to its reputation and goodwill" as a result of its failure to adopt and implement basic modern risk management structures and processes. Credit Suisse executives learned of Credit Suisse's exposure to the fund only a few days before Archegos was forced to close its positions.

Before the Archegos burst, Credit Suisse had been under pressure from the collapse of Greensill, a supply chain finance company. After Greensill declared bankruptcy in March 2021, it closed its $10 billion supply chain financial fund that held Greensill bonds and overhauled its asset management division. Credit Suisse had previously said it had submitted five insurance claims to Greensill by the end of 2021, corresponding to Credit Suisse's asset management exposure of about $1.2 billion.