Bankers loaded up with risk while interest rates were at rock-bottom levels, but investors are now questioning the wisdom of this strategy as bond yields have soared, writes Karen Maley.
with investors worried that the steep rise in interest rates over the past year is rattling the foundations of financial institutions.
But the post-pandemic surge in inflation, and the steep rise in short-term interest rates sent bond yields climbing, and caused bond prices to fall. Last July, Credit Suisse boss Thomas Gottstein stepped down after a tumultuous two years at the helm, and was replaced by Ulrich Körner, who had plans to restructure the bank’s operations, by shifting focus to the wealth management business and away from investment banking, and cutting costs.
The possibility that Credit Suisse would have to sell off some of its financial assets triggered memories ofwhich had to sell assets at a loss after a large exodus of deposits. But the latest panic over Credit Suisse, coming close on the heels of the implosion of Silicon Valley Bank, has further soured sentiment towards bank stocks.
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