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Financial analyst predicts next bank to fold

15 March 2023 By Sarah Neish

Following the collapse of Silicon Valley Bank last week, one Wall Street expert has predicted the next major bank at risk of failure. But which drinks brands could it impact?

The financial world was rocked last Friday when California’s Silicon Valley Bank (SVB) was taken over by the federal government after a rush of depositors withdrew their funds from the struggling bank.

On Monday, SVB was subsequently bought by Europe’s biggest bank, HSBC, for £1 in an acquisition which HSBC said “makes excellent strategic sense for our business in the UK.”

Then, just hours after Wall Street analyst Robert Kiyosaki warned that another major world bank is in danger of folding, the bank in question admitted “material weaknesses”.

Kiyosaki, who accurately predicted the 2008 collapse of Lehman Brothers, said on Fox Business broadcast Cavutu: Coast to Coast: “I think the next bank to go is Credit Suisse, because the bond market is crashing.”

“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.”

Shortly after his prediction, Credit Suisse revealed in its annual report on Tuesday that it was actioning a “remedy plan” after finding that its reporting procedures for the fiscal 2021 and 2022 years were “not effective”.

“Management did not design and maintain an effective risk assessment process to identify and analyse the risk of material misstatements in its financial statements,” Credit Suisse said in its report.

The claim has caused a flurry of concern among Credit Suisse shareholders.

Last month, the Swiss bank reported its biggest annual loss since the 2008 global financial crisis and scrapped annual bonuses for its top executives. Credit Suisse Group warned it expects to take a substantial loss after clients pulled a record amount of funds in the final three months of 2022. The blow it suffered is thought to represent a net loss of 1.39 billion Swiss francs (£xxxx).

Following the news, Credit Suisse shares fell by 5% this week, before recovering some ground to be down 0.7%.

Could it be worrying news for drinks companies with ties to the bank? Amber Beverage Group took out a €27 million loan with Credit Suisse in 2020 to “improve the effectiveness of its operations” and help with its expansion plans.

“Having sufficient capital to run your global business is crucial to ensure operations run smoothly. The boost from Credit Suisse will help us to consolidate our cash flow from Australia, the UK, Austria within one cash pool,” said Jekaterina Stuge, CFO of Amber Beverage Group, at the time.

Amber Beverage Group, which has ambitions to become one of the world’s top 10 spirits companies, owns brands including Rooster Rojo Tequila, KAH Tequila, The Irishman, Cross Keys Gin, Gradus Vodka, and Cosmopolitan Diva.

In 2010, Stock Spirits Group, the company behind Polish vodka brands Czysta de Luxe and Lubelska and Limoncello maker Limoncè, appointed Credit Suisse as its financial advisor ahead of putting its drinks company up for sale. A deal was eventually completed in November 2021, with Bidco (owned by CVC Advisers Ltd) agreeing an all-cash takeover of Stock Spirits Group PLC.

It is not clear whether Credit Suisse advised Stock Spirits for the full 11 years it took to get a sale across the line.