Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Wall Street expert predicts next major bank to fold

A Wall Street expert has revealed which bank he believes will fail next, following the collapse of Silicon Valley Bank

Kate Plummer
Tuesday 14 March 2023 13:48 GMT
Comments
Robert Kiyosaki has said Credit Suisse will be next to fold as the volatile bond market crashes
Robert Kiyosaki has said Credit Suisse will be next to fold as the volatile bond market crashes (AP2008)

A Wall Street expert has revealed which bank he believes will fail next, following the Silicon Valley Bank (SVB) collapse.

SVB folded on Friday after failing to raise new capital after it sold government bonds at heavy losses to reimburse customers withdrawing their cash.

Now Robert Kiyosaki, who accurately predicted the 2008 Lehman Brothers’ collapse, warned that Credit Suisse could be at risk as the volatile bond market crashes, with rising interest causing bonds to fall in price.

Speaking on Cavuto: Coast to Coast, Mr Kiyosaki said: “The problem is the bond market, and my prediction, I called Lehman Brothers years ago, and I think the next bank to go is Credit Suisse, because the bond market is crashing.”

Holding up a dollar bill, he added: “The US dollar is losing its hegemony in the world right now. So they’re going to print more and more and more of this ... trying to keep this thing from sinking.”

He made the prediction just hours before Credit Suisse admitted it has a “material weakness”.

In its annual report, the bank said it was adopting a remedy plan after it found its reporting procedures for the fiscal 2021 and 2022 years were “not effective”.

But the bank’s chief executive Ulrich Koerner told a financial conference: “Our SVB credit exposure is not material”.

It comes after US President Joe Biden said that people and businesses that had deposited money with SVB would be able to access all their cash from Monday, after the government stepped in to protect their deposits.

The UK arm of the business was bought by HSBC for £1.

Alongside SVB, two other US banks that cater to the cryptocurrency market – Signature and Silvergate – also went out of business last week.

Other global bank shares have also slumped. On Tuesday, Japan’s Topix Banks saw its shares fall by more than 7 per cent, while Mitsubishi UFJ Financial Group’s index was down by 8.1 per cent in mid-day Asian trading.

In the UK, international bank Standard Chartered sunk to the bottom of the FTSE 100 with a 6.9 per cent drop in share price, while Barclays was down by 6.3 per cent.

But credit rating agency Moody’s said that while interest rate increases had hurt the value of large European banks’ bond portfolios, the impact would be “temporary and moderate”.

It added: “We consider European banks are generally well placed to avoid the need to sell their bonds at a loss.”

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in