Spread of financial fear in Switzerland US class action lawsuit Korea PF 'concern'

Shares in Switzerland's largest Credit Suisse fell as much as 17 per cent to a record low and closed around 30% in afternoon trading on the 15th after the bank's largest shareholder, Saudi National Bank, announced that it would rule out more funding as it struggled to raise funds. % fell.
The Swiss National Bank said it was ready to support Credit Suisse if necessary, but stocks across Europe were hit hard, stocks of the region's biggest banks plummeted and financial panic spread.
As Credit Suisse, which boasted the longest history of 166 years, faced accounting problems, the financial panic that swept Europe was described as a financial panic following loan banks from the United States.
On the 16th, Bloomberg reported in an article titled, “Possibility to extend the market stabilization phase as risks increase in Korea”, short-term fund operations of Legoland and Silicon Valley Bank, which defaulted on Korea’s real estate project financing (PF), went bankrupt due to long-term government bond losses. It is connected in one way.
The New York Times said, “Credit Suisse, a 166-year-old institution that has been a symbol of Swiss pride, is fighting for its life after investors dumped stocks as banks ran out of money, sending debt insurance prices skyrocketing in case of default.” The kneeling reaction is yet another indication of just how panicked investors are about the stability of the global financial system following the collapse of Silicon Valley's banks last week, and the bank's rapid decline could threaten other banks in the US and around the world, giving investors and depositors It triggered a widespread sell-off in banking stocks and financial markets, awakening eyes to the potential risks present.”
The Associated Press reported on the 15th that the US Treasury Department’s first announcement of “exclude uninsured deposits” in depositor protection and then a sudden change to “all deposit protection” was a victory for social media.
“The Silicon Valley bank fiasco was dominated by social media platforms for days,” the AP said. “Several prominent investors stepped in to make sure the federal government insured all Silicon Valley bank depositors or made all uninsured whole. If not, they announced exaggerated predictions that there would be more bank runs on Monday (13th), and eventually Washington surrendered. Under a plan announced by US regulators on Sunday (12th), depositors at Silicon Valley banks have been able to access all their money,” it reported.
The AP continued, “The entire banking industry is now grappling with the fact that it could be the next target for a social media bank run. During the ‘meme stock’ boom of 2021, companies were mostly targeted by individual investor groups, but the behavior was similar to how investor groups used social media to boost stocks,” he said, as a reaction to stock-boosting maneuvers during the boom.
"After all, there doesn't appear to be an immediate solution for policymakers," the Associated Press notes. "One possibility is the idea of a bank holiday, in which regulators close banks for a few days to allow cooler heads to prevail."
On the 16th, Bloomberg published an article titled “Korea may extend market stabilization phase as risks rise”, “Korea’s financial regulators will extend market stabilization measures in December last year to respond to growing threats, including the real estate downturn and offshore crisis.” “South Korea was the first major country after a debt crisis and global central banks began raising interest rates to fight inflation. Seoul authorities pledged billions of dollars last year to support financial markets after default on their debts,” he said. In the case of Legoland Korea, a theme park that was later redeemed triggered a collapse in the national credit market,” it reported.
Bloomberg reported on December 7 of last year, “The credit market in Korea is showing signs of stabilization after going through difficulties.” The rate of deterioration is a reminder of the challenges investors face globally as policymakers try to balance inflation control with financial stability.”
The Legoland default is real estate project financing (PF), which attempts a long-term project with short-term financing, so if short-term, high-interest rate funds are operated for a long-term, just like Silicon Valley Bank (SVB), which went bankrupt after relying on long-term government bonds for short-term financing, exposed to the risk of a funding crunch.
Last year, Legoland caused a liquidity crisis for Korean securities companies, and Bloomberg reported it as the 'worst case'. The government and the Bank of Korea invested more than 50 trillion won to temporarily defend against the worst situation in the capital market in the name of a liquidity supply program.
The Korean real estate investment PF method is a structure in which short-term funds, such as ABCP and loans, are used to cover construction costs first, and when sales proceeds come in later from the client, the cash is settled. As of September of last year, the loan delinquency balance was KRW 1,146.5 billion, more than doubling from the end of 2021. As this surges further, the delinquency rate of securities companies and financial institutions is also rapidly increasing. Bloomberg continues to report on the possibility of Korea's credit crunch based on this.

The AP states, “Silicon Valley banks have almost total exposure to one community—the tech industry, venture capital, and startups—their customers, and when this close-knit community of depositors quickly spoke to each other using digital channels, the banks were able to turn word and run. “This is a risk other than the growth of social media, industry experts said,” reported on the 15th.
Bank withdrawals were driven by venture capitalists and business owners from the early stages of Silicon Valley operations, via private message boards or Slack channels, encouraging entrepreneurs to withdraw funds, and within minutes via banking apps and phone calls.
A full-fledged bank run took place on the 9th, when billionaire venture capitalist Peter Thiel advised investment companies to “close accounts with Silicon Valley banks.”
The U.S. Department of Justice and the Securities and Exchange Commission launched an investigation into the bankruptcy of a Silicon Valley bank, and investors told the bank's parent company, Financial Group, and its CEO and chief financial officer (CFO), "The bank will not disclose the risks to its business from future interest rate hikes." filed a class action lawsuit in the Northern District Court of California.
The Justice Department's investigation will include a dedicated fraud prosecutor and federal prosecutors, as well as criticism of the Federal Reserve for missing what observers are saying is a clear sign that Silicon Valley banks are at high risk of default.