credit suisse bank crisis credit suisse silicon valley bank collapse why people remember yes bank

New Delhi: The world is grappling with the global banking crisis. Banks of America and Europe are going through a banking crisis. In the last two weeks, America’s big banks Silicon Valley Bank, Signature Bank were ruined. Credit Suisse Bank of Switzerland has gone bankrupt. Even though UBS Bank has announced to buy Credit Suisse. Even though the announcement brought life to Credit Suisse, it left millions of investors in the lurch. His billions of rupees were destroyed in a few minutes after this news came. In fact, according to a Reuters report, with the merger with USB Bank, Credit Suisse has announced the write-off of its Additional Tier-1 Bonds ie AT-1 Bonds.

billions of rupees

After this announcement of Credit Suisse, billions of rupees of lakhs of investors got wasted. Credit Suisse’s announcement to write down AT-1 bonds to zero has raised concerns among millions of investors. Credit Suisse took this decision after the order of the Swiss regulator FINMA. This news reduced the value of these bonds of Credit Suisse to zero. Let us tell you that the total value of AT-1 bonds is $ 17.24 billion i.e. about Rs 1 lakh 42 thousand 492 crore. Now its value has become zero.

Why did you remember Yes Bank?

This decision of Credit Suisse has reminded people of Yes Bank. In March 2020, Yes Bank, which had reached the verge of ruin, also wrote off its Additional Tier-1 (AT-1). This means that the investors who buy these bonds neither get the principal nor the bank will pay them interest. That means the entire money of the investors will be lost. After this announcement by Credit Suisse, people are missing Yes Bank. On social media people are talking about it.

The mistake of Credit Suisse that wrote the story of the bank’s ruin, was forced to be sold to the ‘enemy’

What was the case of Yes Bank?

Similar bondholders were shocked in the Yes Bank scam in India. In March 2020, the RBI ordered the struggling Yes Bank to write off its AT1 bonds as part of the restructuring scheme. RBI took this decision to save the bank, because the bank did not have money left to pay the bond holders. With the consent of RBI, Yes Bank has written off AT-1 bonds worth Rs 8,415 crore and reduced its value to zero. People who invested in these bonds lost crores of rupees. Although this matter reached the court.

What are AT-1 Bonds

Additional Tier-1 bonds are bonds that do not have a maturity period. Investing in this bond is fraught with risk. These are unsecured bonds and hence the interest on it is also higher. Banks issue these bonds to increase their capital. The bank cannot take it back once it is issued. Not only this, the bank also reserves the right to stop its interest payment. If the total capital of a bank goes below a certain limit, then the bank can either convert these bonds into shares or reduce their value to zero. Investors invest in this bond taking the risk of higher interest.

How did the 166-year-old Credit Suisse bank, which gave ratings to others, reach itself on the verge of drowning, will India’s tension increase?