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Things not going well for Credit Suisse

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bernorange

bernorange 8,361

Posted
Posted

Relax, rumor has it Jim Cramer says they are fine.

But seriously, Credit Suisse looks to be in big trouble.  Bear Sterns/Lehman Bros. kind of trouble.

I also hear that Deutsche Bank is hurting (still? or again?).

Central banks are stuck between taming inflation (and letting the banks fail risking systemic failure) or bailouts (stoking inflation).  Not great, Bob!

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bernorange

bernorange 8,361

Posted
Posted
1 minute ago, Hefeweizen said:

... Weirdly it’s US banks that seem much less levered than some of the euros. 

Perhaps because they aren't having to deal with the stress of forex moves (strengthening dollar against their local currencies).  Fed may be forced to pivot on the rate raising to ease the stress on Euro banks.

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Hefeweizen

Hefeweizen 5,321

Posted
Posted
Just now, bernorange said:

Perhaps because they aren't having to deal with the stress of forex moves (strengthening dollar against their local currencies).  Fed may be forced to pivot on the rate raising to ease the stress on Euro banks.

Wouldn’t that be the ultimate fuck you to people.  Yeah we’re tightening but our banking buddies in Europe are hurting so we’re back to QE.

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Laxtonto

Laxtonto 12,080

Posted
Posted

This is such a weird time to be following the global financial news.

I don't even know where to start. All we really need now to completely throw absolute chaos is to see a massive implosion of the Chinese real estate market sparking a ton of defaults and the corresponding bank runs that could collapse their banking industry as well. (Note at the time, I do not have any information implying that there is any more of an impending real estate collapse in China than during the last 6 months)

If the euro and Chinese banks all implode, then what?  I don't like to do doomsday scenarios, but I do like to try and gameplan on what to do if they do happen as those extreme events tend to be some of the best opportunities to generate extreme returns.

 

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Fudge Nuggets

Fudge Nuggets 19,190

Posted
Posted (edited)
8 minutes ago, Laxtonto said:

This is such a weird time to be following the global financial news.

This is fuck all (for now) compared to late 2007 - early 2009.

Quote

If the euro and Chinese banks all implode, then what?  I don't like to do doomsday scenarios, but I do like to try and gameplan on what to do if they do happen as those extreme events tend to be some of the best opportunities to generate extreme returns.

Everyone gets inundated with articles to buy gold, silver, shitcoins, guns & ammo.

Just like every other time the markets act naughty.

Edited by Fudge Nuggets
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Laxtonto

Laxtonto 12,080

Posted
Posted
Just now, Fudge Nuggets said:

This is fuck all (for now) compared to late 2007 - early 2009.

Don't remind of those days... I was finishing up a degree and looking to get a "real job" during that. One of the reasons I ended up going to grad school and eventually getting a PhD..

 

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Fudge Nuggets

Fudge Nuggets 19,190

Posted
Posted
3 minutes ago, Laxtonto said:

Don't remind of those days... I was finishing up a degree and looking to get a "real job" during that. One of the reasons I ended up going to grad school and eventually getting a PhD..

 

I got very lucky back then in that I was assigned to a natural gas development project that was years behind schedule and a few billion $ over budget when they brought first gas on line in January 2009.  It was also in a part of the world that no one wanted to go.  The major international oil and gas company running the show wasn't going to shut down shit and since no one else would want to go there I had probably the safest job in my company at the time.

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NotActuallyALonghorn

NotActuallyALonghorn 4,976

Posted
Posted
9 hours ago, Laxtonto said:

Don't remind of those days... I was finishing up a degree and looking to get a "real job" during that. One of the reasons I ended up going to grad school and eventually getting a PhD..

 

I graduated in 2009 with a degree in Forestry. It took me a year and a half just to get a job that paid over $10/hr. I should have just gone back to school to get a degree in engineering. 

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Fudge Nuggets

Fudge Nuggets 19,190

Posted
Posted
34 minutes ago, NotActuallyALonghorn said:

I graduated in 2009 with a degree in Forestry. It took me a year and a half just to get a job that paid over $10/hr. I should have just gone back to school to get a degree in engineering. 

Yep, lots of Smokey the Bear mother fuckers make the easy transition to engineering.

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MeerkatBong

MeerkatBong 115

Posted
Posted

To think, this is all because of Bill Hwang.

Quote

Most experts have pointed out that yes, Credit Suisse’s rapid CDS jump does mean investors think the firm has a higher probability of defaulting on its loans. But if you zoom out a little, that probability is still very low

From yesterday which is a good reality check:

Quote

As of 9 a.m. New York time today, five-year CDS on Credit Suisse Group AG was trading at about 350 basis points, meaning roughly — roughly! — that I would have to pay you $3.50 per year for this bet, and you’d pay me $100 if Credit Suisse defaults. What does this tell you about the market-implied probability that Credit Suisse will default on its debt? Well, Credit Suisse CDS was trading at about 250 basis points on Friday,  about 135 in June, about 57 at the start of the year. So it tells you that the market-implied probability of default has gone up a lot. But it is still absolutely low. You would not charge me $3.50 per year for $100 of insurance against Credit Suisse defaulting unless you thought the chances of that happening were slim.

 

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bernorange

bernorange 8,361

Posted
Posted

Not sure why the Credit Suisse story isn't being discussed here, but...

Quote

SHANGHAI/HONG KONG, March 20 (Reuters) - Credit Suisse told staff its wealth assets are operationally separate from UBS for now, but once they merged clients might want to consider moving some assets to another bank if concentration was a concern, according to an internal memo.

The memo, dated Sunday and seen by Reuters, gave talking points to Credit Suisse (CSGN.S) staff for client conversations after a historic Swiss-backed acquisition of the troubled bank by UBS Group (UBSG.S).
...

https://www.reuters.com/business/finance/credit-suisse-tells-staff-plans-investment-banking-be-informed-later-memo-2023-03-20/

I mean, it's like they want to spark a bank run.

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bernorange

bernorange 8,361

Posted
Posted
Quote

...
The justification for selling Credit Suisse at 7pc of book value and vaporising its bonds is that the bank is in worse trouble than supposed. Either Swiss regulators are exaggerating - in order to expropriate $17bn (3pc of Swiss GDP) - or global monetary tightening has already done widespread systemic damage.
...

https://www.telegraph.co.uk/business/2023/03/21/banking-crisis-young-yet-brace-long-hot-summer-financial-accidents/

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Hefeweizen

Hefeweizen 5,321

Posted
Posted

CS has been an animated corpse for years.  The whole Swiss bank as a safe haven myth is garbage, they were one of the worst risk takers out there.  Once the Saudis said they weren’t putting more B money in it was over. 
 

I just saw Pimco taking a 350 million write off this morning on CS, lots more are coming.

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bernorange

bernorange 8,361

Posted
Posted (edited)

The embed cut the tweet text:

Quote

Credit Suisse has been fined over 50 times for a total of $11.4 billion since 2000, an average of $570 million/year.

That's almost four times the $3.25 billion that UBS just paid to acquire them.

They dug their own grave.

 

Edited by bernorange
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Hefeweizen

Hefeweizen 5,321

Posted
Posted
1 minute ago, 52-80 said:

Me and wally are now shareholders of UBS. So we got that going for us, which is nice. 

What is criminal is that the CS bond holders are the ones taking a haircut here, they should be ahead of equity but the Swiss basically said fuck foreign bond holders.  Waiting to see what other debt is actually not senior.

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wackawacka

wackawacka 179

Posted
Posted
On 3/22/2023 at 8:15 AM, Hefeweizen said:

What is criminal is that the CS bond holders are the ones taking a haircut here, they should be ahead of equity but the Swiss basically said fuck foreign bond holders.  Waiting to see what other debt is actually not senior.

Eh, the AT1s based in Swiss law were very explicit on ability to wipe out these bonds above equity. Too bad people didn't read the fine print.

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