The banking crisis that began in the U.S. has now spread to Europe. Recent concerns over the solvency of Credit Suisse, Switzerland's second largest "global systemically important bank" (G-SIB), were due in no small part to the runs on U.S. banks. What made Credit Suisse vulnerable was that reputational and financial difficulties had plagued it over the past decade, including problems with its financial reporting, exposure to the failed companies Archegos and Greensill, and a criminal conviction over money laundering, to name a few. At the time of writing, UBS has agreed to buy Credit Suisse in a $3 billion deal brokered by regulators, hearkening back to JPMorgan's takeover of Bear Stearns in 2008. The situation is still evolving, and in the U.S., regulators continue to monitor banks for signs of contagion.
We discuss in this episode of The Wealth Effect Podcast:
📉 U.S. Vs. Euro Bank Stock Performance
📊 Global Central Bank Balance Sheets
⚖️ Weighing Risk Management & Opportunity Cost
Matt Faubion, CFP®
Founder - Wealth Manager
Show notes and charts:
Banking system concerns have spread to Europe
Central banks have tightened conditions over the past year
Waiting for market pullbacks often results in missed opportunities
The bottom line: Banking crises are nothing new and, frankly, are a fact of economic life throughout history. Today's banking crisis is still evolving and emphasizes the importance of diversification and risk management in one's wealth strategy.
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