Global financial markets were affected by the failure of Silicon Valley Bank and Signature Bank in the US. Stock markets fell in Asia and Europe, and banks fell because of concerns about a contagion effect following the failure of two lenders. Another large bank is now expected to fail, according to a recent investor prediction. Robert Kiyosaki, a Wall Street analyst best known for correctly predicting the demise of Lehman Brothers in 2008, asserts that Credit Suisse is the next US bank in danger of failing.
Reason behind the US Bank failure
“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,” Mr. Kiyosaki told Fox News.
The Rich Dad Company co-founder explained how the bond market will put the US in “serious trouble” as he expects the American dollar to weaken.
“The bond market is much bigger than the stock market. The Fed is up and they’re the firemen and the arson,” Mr. Kiyosaki said on Fox News‘ ‘Cavuto: Coast to Coast’ show.
“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 added.
Mr. Kiyosaki said he is “concerned” about Credit Suisse – the world’s eighth-largest investment bank – due to the “perfect storm” caused by the bond market crash and the upcoming retirement of his generation.
Read: Why US closed Silicon Valley Bank?
He also advised exploring or buying into silver and gold investments during a volatile market.
Robert Kiyosaki’s prediction
Mr. Kiyosaki’s prediction came just hours before Credit Suisse admitted to a “material weakness” in its reporting procedures for the 2021 and 2022 fiscal years.
“The material weaknesses that have been identified relate to the failure to design and maintain an effective risk assessment process to identify and analyze the risk of material misstatements in its financial statements,” the report said.
In recent years, Credit Suisse has faced a slew of issues, including its exposure to the collapses of US asset manager Archegos and UK firm Greensill.
Since being shaken by the bankruptcy of Greensill in March 2021, the first of a string of scandals, Credit Suisse has lost about 80% of its market value.
US shut down Silicon Valley Bank
Earlier, on Friday, US regulators shut down Silicon Valley Bank, sending global banking shares sputtering as markets worried about possible contagion from America’s biggest banking failure since the 2008 financial crisis.
The medium-sized bank was unable to survive on its own due to a run on deposits, so US authorities intervened and seized its assets. Since the 1980s, SVB has played a significant role in financing US startups.
By the end of 2022, SVB, which specialized in startup financing, was the 16th-largest US bank by assets with $209 billion in assets and roughly $175.4 billion in deposits.
Its failure ranks as the second-largest failure for a retail bank in the US and is the biggest bank failure since Washington Mutual in 2008.
In response to the abrupt collapse, Treasury Secretary Janet Yellen called an urgent gathering of the top US banking regulators.
“Secretary Yellen expressed full confidence in banking regulators to take appropriate actions in response and noted that the banking system remains resilient and regulators have effective tools to address this type of event,” a Treasury statement said.
Based in the shadow of the world’s biggest tech companies, SVB’s travails have raised fears that more banks may face doom as the fallout from high inflation and hiked interest rates squeezes weaker lenders.
In front of the Silicon Valley Bank headquarters on a rainy day in Santa Clara, California, nervous customers spoke in small groups wondering how they could withdraw their money as news spread of the government seizure.
One customer dressed in a t-shirt and sweatpants, and who spoke on condition of anonymity, said he used the bank for payroll at his startup.
“It’s not a good situation. A lot of really top tier (venture capital firms) have very high amounts of exposure here,” he said, adding that he was worried for his employees.
A day after the four biggest US banks lost $52 billion in market value as a result of SVB’s problems, the biggest European banks also suffered losses, with Deutsche Bank falling as much as 10% at one point.
Although Yellen told a congressional panel that she was “monitoring” a few banks, shares in Wall Street heavyweights Bank of America, Wells Fargo, and Citibank fluctuated on Friday.
