Everyone in the (global) financial community has second (or third) thoughts these days about Credit Suisse. Once the Big Boy in the room, with the notion of a prime location to work, inflated salaries, and the attitude that only the top tier organisations of the financial industry can produce has burned through capital, putting it in row with the most hilarious startup companies.
Neither size, market cap, nor honorable legacy and tradition can protect us from bad judgement, inertia, resistance to change, and ultimately, failure.
Considerations of too big to fail, system relevance, hopeful restructurings, and similar phrases.…are only synonymous for management that has systematically failed to create sustainable value and lost the organisation’s right to exist. In efficient markets, cluster risk would be excluded, hence, the argument of “too big to fail / system relevance” wouldn’t be feasible, hence, Credit Suisse (like others before), would leave the marketplace through (forced) merger or simply bankruptcy, yet, freeing up demand for more efficient and agile companies to grow. We call this a healthy competition. For a former top tier bank, this might be a new term.
Rescue programs for Credit Suisse and alike, create long term liabilities to the Swiss Financial Sector.
Though justified in a specific situation, where market power is concentrated among too little suppliers, any form of protectionism and public subsidies for organisations, that have repeatedly proven their inefficiencies and lack of adaptability is creating long term liabilities to the competitiveness of the marketplace.
The map of the world is different.
Throughout geography classes, most of us were presented with a map of the world with Europe in the center. In this model of the globe, dimensions are skewed towards the edges. Americas, Asia, Africa, not even to mention Australia, appear out of proportion and are underrepresented to their actual size.
With a perspective from Zurich’s prestigious Paradeplatz, the Middle East is a far-far-away-land, skewed in its economic dimensions and dynamics.
The team of Leverage Experts has been operative in the Middle East since 2019. A constant in the analysis of the perception of the GCC-countries, in European Media and Board discussions is a lack of understanding of the local economy. Little is known beyond Dubai being a holiday destination, Saudi, having Oil, and Qatar just hosted the FIFA World cup. Hence, we also note surprise in the European media, when H.E. Ammar Al Khudairy, Chairman of Saudi National Bank, and 10% shareholder of Credit Suisse, declined interest in liquidity supporting measures for the loss-making entity.
It is time to reconfigure the perspective. Other regions of the world have moved from the edges of the global economy to the center. Their perspective on performance of former European “Heavy Weights”, might be unbiased, rational, and surely without national pride or interest. In a global world, we cannot afford to limit our thinking to a two-dimensional map of what is actually a globe. We are not in the middle. Dimensions are different than what they appear, and the thing keeps turning. To earn the right to exist in a global market, organisations must be efficient, agile and adaptable to the ever-changing global economic environment. This is trivia and taught throughout any MBA class. However, applying this to practice is a challenge for the executive management of the firm. Credit Suisse is only a recent entry to the long list of failed mature Western organisations.
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