The Banking Problem Behind Credit Suisse’s Buyout, Not Crypto

Key Points:

• Credit Suisse fails, UBS acquires. Swiss government helps.
• $5.5B loss on loans. Bitcoin prices trending up.
• Banks don’t have a crypto problem. Banks have a banking problem.

Credit Suisse’s failure and UBS’s acquisition are making headlines in the financial world. Discover why Credit Suisse failed and how the Swiss government is helping. Get insights into the banking industry and learn why Bitcoin isn’t the cause of banks’ failures, as per CoinDesk.

Credit Suisse is the latest bank to fail in 2023, with UBS stepping in to buy the struggling bank for $3.25 billion of UBS stock. The Swiss government is helping to absorb some of the coming writedowns of CS’s loan book.

UBS had to save CS after the Swiss National Bank’s liquidity injection proved insufficient to buoy its operations once the Saudi National Bank, CS’s largest shareholder, said it wouldn’t provide any more assistance. In 2008, UBS was saved by the long arm of the Swiss government. This time the government needed UBS to lend a helping hand.

Despite its lofty side quest to disrupt finance, it wasn’t crypto that upended these banks, and it certainly didn’t upend Credit Suisse. Instead of failing because Bitcoin made banking services obsolete, Credit Suisse failed because it wasn’t good at being a bank.

Credit Suisse has a history of fraud and in 2021, it took $5.5 billion of losses on loans in connection to Archegos. Some other stuff happened, and then Credit Suisse was forced to sell itself to a competitor at a steep discount.

Bitcoin’s price is trending up as banks fail simply because they are banks. This is the first time the narrative of bitcoin as a way to opt out of unadvisable banking practices is playing out as expected.

Banks are failing because they are bad at being banks, and the Bitcoin blockchain is entirely separate from those failures. Bitcoin is on the outside looking in on the mess and offers itself as a simple means to opt-out. Banks don’t have a crypto problem, and banks have a banking problem.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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