Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Street
The Street
Business
Ellen Chang

Embattled Credit Suisse Faces Social Media Wrath

Social media accounts on Twitter and Reddit began speculating over the weekend about the potential fallout of Credit Suisse (CSGKF) as shares of the well-known Swiss bank fell to new record lows, mirroring its bonds.

The Swiss investment bank has faced rumors for several months since the behemoth said in July it would alter the focus of its business and exit some businesses to lower its risks. 

Comments from CEO Ulrich Körner in a memo to its staff on September 30 backfired and did not calm investors or the market. He said there were "many factually inaccurate statements being made” in media coverage of the bank’s situation. Shares of Credit Suisse have declined by 58% this year and were down by 9% at one point on October 3.

Credit Suisse has faced several financial missteps, including a massive loss of $5.1 billion from its client, Archegos Capital Management in 2021. Now the cost of insuring the behemoth's bonds from defaulting rose at least 15% last week, which are levels that have not occurred since 2009 in the aftermath of the financial crisis, also known as the Great Recession.

Reddit Bets on Credit Suisse Bankruptcy

Rumors surrounding the future of the banking giant have been swirling in business and political circles, as well as on social networks who are always ready to pounce on the latest innuendo. 

The Reddit channel WallStreetBets, a forum created on January 31, 2012 with a particular emphasis on highly speculative trading strategies, posted information about Credit Suisse's shares plummeting.

On Oct. 1, the account began a discussion of the stock, with a headline reading " Credit Suisse is going Bankrupt."

 "The collapse in Credit Suisse's share price is of great concern. From $14.90 in Feb 2021, to $3.90 currently," the post said.

The discussion garnered 472 comments, including posts alluding to the 2008 global financial crisis which ended with U.S. investment bank Lehman Brothers filing for Chapter 11 bankruptcy in September 2008 after bets on mortgage-backed securities were upended leading to the financial crisis.

The comments included ones from a user named "Sguru1" who asked "If credit suisse goes bankrupt what bank are people gonna use as a middle man to commit financial crimes?"

Another user, "forreddituse2," responded that "Deutsche bank and HSBC are happy to take the job." User "PhotonResearch" said "Wells Fargo lets you do anything if you let them open additional accounts in your name."

Aversion to Big Banks

Deutsche Bank (DB), Wells Fargo (WFC) and HSBC (HSBC) are banks that have been singled out by regulators in recent years for practices deemed illegal. Wells Fargo, for example, opened accounts in the name of customers without their knowledge.

Banks bore the brunt of criticism on Reddit. 

Reddit users, who are often mostly Gen Z and Millennials, have never made a secret of their aversion to Wall Street, the heart of traditional finance. For them, the big banks are the face of this traditional finance whose power they challenged in 2021 by pushing the shares of companies with an outdated economic model like GameStop (GME) and AMC (AMC).

"Any large bank that's currently committing crimes, which is probably all of them," said user canadadrynoob, without providing any evidence.

Speculations on the future of Credit Suisse were also shared by Twitter users.

On the platform, the account named "Credit M Suisse" with the handle "cmsholdings" with 125,900 followers mocked the bank's name, stating "I mean it has Credit in its name how bad could it really be."

Another Twitter account run by Mike Alfred, who said he is a value investor and former CEO at BrightScope & Digital Assets Data, expressed concern about the impact of the bank.

"They're going to take down the global economy. Short everything to zero, yo."

Some Twitter accounts have blamed the central banks for the woes facing Credit Suisse. They said Credit Suisse's difficulties are also to be found in the inflation-fighting monetary policies of central banks.

"Credit Suisse first. The U.K next. Money printers will run full blast. Every fiat currency blows up. Weimar style hyperinflation coming to a country near you!" said Twitter user "Inflation Trackers."

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.