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Credit Suisse sheds nearly 25%, key backer says no more money
- chiefalchemist 4y agoSo the market was expecting the investor to exceed their regulator limit? That doesn't make sense. What am I missing?
- lordnacho 4y agoThe investor is basically an extension of the Saudi state, so it's not unthinkable that if they wanted to, there would be an exception made.
- asah 4y ago...or another entity spun-up to make this investment.
- cm2187 4y agoI suspect it has more to do with accounting standards. After a certain % ownership you need to consolidate the entity in your group, which from a regulatory capital point of view means consolidating all of the RWAs while not getting credit for all the capital in the entity.
- pestatije 4y agoIt might be that it's not a forbidden limit but a limit with strings attached
- Rexxar 4y agoOr the majority of market participants were not aware of this limit.
- pearjuice 4y agoThis comes after news that there were "material weaknesses" found in their financial reporting the last few years. They also failed to "design and maintain an effective risk assessment process to identify and analyze the risk of material misstatements". Finishing it off with massive outflows of customer funds - larger than anticipated - which has "exacerbated and may continue to exacerbate liquidity risk". Will they survive? (source: https://www.cnbc.com/2023/03/14/credit-suisse-finds-material-weaknesses-in-financial-reporting-says-outflows-not-yet-reversed.html https://www.cnbc.com/2023/03/14/credit-suisse-finds-material...)
- yolo3000 4y agoWhere do these massive outflows of customer funds go? Do these customers see the risk of collapse before everybody else and move the money to another bank, or.. ?
- ingenieros 4y agoDubai perhaps? With all the sanctions in place there's very few places where oligarchs can safely store their money. https://www.cnbc.com/2022/04/27/credit-suisse-document-shredding-not-related-to-russia-oligarch-sanctions.html https://www.cnbc.com/2022/04/27/credit-suisse-document-shred...
- icecap12 4y agoThere are multiple places. For sure other banks. JPM and other “too-big-to-fail” banks received billions of dollars in deposit inflows over the last few days[0]. But for me personally, I’ve been moving cash to US Treasury bonds, and based on recent bond prices, so have others. Short term treasuries were nearing a 5.1% yield as of early last week, and now are below 5% due to demand. Last fall, I moved cash to HYSA accounts for a higher yield, because my bank was still paying 0.05% interest, presumably because they were loaded with low-yield treasuries and mortgage-backed securities. In general, a bank is not a great place to park tons of money, at least that’s what I’ve learned. I’m tired of getting screwed by them. What the media calls “faith in the banking system” I call getting bent over. Of course there are valid uses for banks, especially in business. But I’m done parking large amounts of cash there. [0] https://www.reuters.com/business/finance/jpmorgan-other-big-us-banks-flooded-with-new-clients-post-svb-collapse-ft-2023-03-14/ https://www.reuters.com/business/finance/jpmorgan-other-big-...
- HPsquared 4y agoThat's a double whammy. If you hold a large amount of cash in a low-yielding bank account, you not only get less yield but are also exposed to the possibility of bank failure (which is itself increased by the increase in treasury yields).
- oblio 4y ago> Short term treasuries were nearing a 5.1% yield as of early last week, and now are below 5% due to demand. How short term are we talking about?
- stephenitis 4y agoAny predictions on if they'll just let this bank implode naturally? I feel like we are close on the verge of a event that sets off the recession. It feels like the banking sector is going to be the fuse again.
- theandrewbailey 4y ago[flagged]
- MrMan 4y agodo you know what you are talking about or are you just being dramatic
- esja 4y agoNot a chance of a natural implosion. CS is one of a very small number of globally systemically important banks.
- neximo64 4y agoCS stopped being globally systemically important a decade ago. More and more so by selling off pieces of the bank the past few years
- tootie 4y agoThey've dropped in the rankings but still have over $1T AUM. Far bigger than SVB.
- Scoundreller 4y agoI think the AUM comparison is something everyone needs to be careful of. Vanguard has a lot of AUM from me (from my point of view anyway), but it’s (hopefully) 100% passed through to security issuing organizations. They only get to rake a fraction of a percent from me for their operations. Wayyyyy different than a bank with $billions in checking and savings accounts where they can do ??? with it.
- ta988 4y agoThe investor may just not be able to inject more legally. There are limits.
- alex_suzuki 4y agoThat is actually the case. The Saudis claim "regulatory reasons" prevent them from taking a >10% stake.
- duxup 4y agoI believe that is exactly what they are saying.
- Waterluvian 4y agoI was expecting a cliff in the chart but you can’t even see it. They’ve been consistently shedding value for a year now.
- mupuff1234 4y agoWay over a year, since 2008.
- rluhar 4y agoTLDR - Credit Suisse has been a sh*t show for over a decade. This has been coming for a while. Credit Suisse is in investment banking and wealth management. It does not have a significant retail presence (EDIT - outside of Switzerland). Credit Suisse has also had a number of accounting, risk management, and other scandals over the last few years. They were bailed out late last year by a fund linked with Saudi Arabia who took a ~10% stake in the company. Today, they (the Saudi fund) refused to inject more capital and the shares have collapsed.
- esja 4y agoWhat? CS has a massive retail bank. It’s their most profitable division and has existed for 150+ years.
- rluhar 4y agoWealth Management is not the same as retail banking. "The Wealth Management division offers comprehensive wealth management and investment solutions and tailored financing and advisory services to ultra- high-net-worth (UHNW) and high- net-worth (HNW) individuals and external asset managers" Reference: https://www.credit-suisse.com/about-us/en/our-company/structure-strategy/business-divisions.html https://www.credit-suisse.com/about-us/en/our-company/struct...
- Havoc 4y agoOf course not. Why would you put in your own money when you know taxpayer will... That future expectation created is part of the price paid when you bail out entities.
- rr888 4y agoThe problem with all these banks disappearing is that there are continuously fewer and fewer choices left. Eventually there will be a handful of megabanks and nothing else. I guess this is happening in every industry these days.
- deleted 4y ago[deleted]
- duxup 4y agoIs this an issue with specific types of banks? In the US the variety of consumer banks seems very healthy. Granted I understand there are different types and things are different elsewhere.
- wil421 4y agoExactly, I still bank at BoA due to convenience and it being my longest open account but any bank service I need is first run by my Credit Union.
- samch 4y agoWe do the exact same thing. BofA is a convenience for us, but our credit union is a safe haven with better rates, better service, and less risk.
- Scoundreller 4y agoI’m sorta the opposite, I still use my out-of-town credit union. Best investment for my life: been getting $5 every year on my initial $5 share (got in as a child) for a few decades now. Have a line of credit with a big bank that I don’t really use, but means there’s a bank everywhere I can walk into if I needed a large amount of cash or a bank draft, and I pay it off the same day.
- duxup 4y agoI switched to all credit union now. Works great for me.
- 4y ago
- mym1990 4y agoIs there anything that China/Russia and friends can do to tip this whole thing over?
- IAmGraydon 4y agoSure - invade Taiwan.
- myth_drannon 4y agoI bet a lot of Russian oligarch's/China's money is parked at Credit Suisse. They will be quiet as a mouse.
- mym1990 4y agoIt's clear that Russia is getting more and more adversarial, the question is where is the line where money matters less than ensuing pure global chaos. New oligarchs and billionaires will be made in a new world.
- krona 4y agoRapid dedollarization and announcing a new currency (e.g. BRICS currency?) Gold purchases suggest some countries are preparing for the post-dollar world.
- myth_drannon 4y agoThat's being going on at least since 2008... Zerohedge's favorite topic.
- latchkey 4y agoSomeone on HN mentioned yesterday that CS is being priced in at a 10% chance of failing in the CDS market. I wonder how much this increases after this news. https://news.ycombinator.com/item?id=35152175 https://news.ycombinator.com/item?id=35152175
- eunos 4y agoClose to 40% https://twitter.com/Schuldensuehner/status/1635944561074745347 https://twitter.com/Schuldensuehner/status/16359445610747453...
- downrightmike 4y agoI think it is more like chance of rain ie: 100% chance of 40% of CS failing
- lightbendover 4y agoAll will fail eventually.
- PreInternet01 4y agoOr, as Matt Levine put it in his most recent newsletter (https://web.archive.org/web/20230314194552/https://www.bloomberg.com/opinion/articles/2023-03-14/svb-took-the-wrong-risks https://web.archive.org/web/20230314194552/https://www.bloom...): "Not now Credit Suisse!" CS has been tethering on the brink of bankruptcy for a good while now -- interesting to see if this will finally push them over or not. The Swiss would not be amused for such a stalwart of the banking business to disappear, but...
- nikanj 4y agoLooks like archive.org has added an anti-bot wall, and poor old me on my iphone don’t qualify as human
- neonate 4y agohttps://archive.ph/PABDC https://archive.ph/PABDC
- choeger 4y ago[flagged]
- deleted 4y ago[deleted]
- dieselgate 4y agoOh cool, was gonna mention the similar topic. As a rarity I'm viewing on a laptop right now and the anti-bot wall still doesn't process after holding. I believe this is Bloomberg specific feature as well - just wondering if others have the same problem on wayback but seems from my data points it'd be universal across devices. Thanks to the person below to post another link, will give that a shot
- kibwen 4y agoFirefox reader mode bypassed the anti-bot wall for me.
- elric 4y ago
- sschueller 4y agoMost Swiss have written off this pile of garbage a long time ago. I also don't think anyone would give them a bailout. Scandal after scandal, they occur so frequently you aomost expect the next one to be in tomorrow's paper.
- resource0x 4y agoSwiss National Bank designates CS as systemically important: QUOTE: " Global systemically important banks: - Credit Suisse - UBS " There are only 2 banks in this category. Source: https://www.finma.ch/en/enforcement/recovery-and-resolution/too-big-to-fail-and-financial-stability/systemically-important-banks/ https://www.finma.ch/en/enforcement/recovery-and-resolution/... Expect a bailout :-)
- onlyrealcuzzo 4y agoWith what money? An entire year's worth of Swiss tax revenue couldn't cover this bailout...
- arez 4y agoyou can just print money, no need to have any revenue as a state. States are run different than a household
- onlyrealcuzzo 4y agoNot really - they'd need to print $200B - which is 1/4th of GDP. That would match what the US printed during the pandemic ($5.2T) adjusted to the size of the economy. You would expect to get similar devaluation of the currency. And for what? Credit Suisse has been one of the worst banks in the world for a decade. They only employ 26k people in Switzerland (0.5% of the workforce).
- TacticalCoder 4y ago> And for what? The definition of a "systemic" bank is one that, should it fall, could take the world's entire financial system down with it. So the "for what" would be: to prevent the world's entire financial system from crumbling. Should one systemic bank fall and make all the other systemic ones fall like dominoes then it's definitely not unthinkable that there'd be logistics issues and very likely famine in some places and probably civil war in several countries. Politicians may not care much: but they care about getting re-elected. And the whole system crumbling and famine and civil war means politicians not getting re-elected. I mean... Take a small player like SVB: it's not even on the list of systemic banks. A measly $177 bn AuM: that's literally one order of magnitude smaller than Crédit Suisse. And yet everybody was whining and crying for SVB deposits to be saved and the goverment came to the rescue.
- yalogin 4y agoIsn't Credit Suisse the bank that laundered and legitimized all the money from the drug cartels? They kept getting slaps on the wrist for a bunch of atrocities and bad choices and now finally they are seeing some repercussions of those choices?
- mtlmtlmtlmtl 4y agoYep. I went and quickly looked them up on Wikipedia. They have a list of controversies so long that the outline of the "controversies" subheading won't even fit on my phone screen. Drug cartel money, strong ties to the Russian oligarchy, forex manipulation, corrupt dealings with African governments, destruction of records, tax fraud. The list is extensive to say the least.
- thefounder 4y ago>> Drug cartel money, strong ties to the Russian oligarchy, forex manipulation, corrupt dealings with African governments, destruction of records, tax fraud. Sounds like HSBC
- odiroot 4y agoAnd Deutsche Bank.
- samstave 4y agoPrecisely why HSBC bought UK SVB They need to protect their laundering clients. HSBC is an extension of the UK laundering fraud arm of Yee Olde Kingdom. Expect much fuckery afoot.
- mtlmtlmtlmtl 4y agoIf anyone is interested in digging into this more, read up on the City of London. Not to be confused with London, the capital of England, the City of London is effectively a weird de facto tax haven city-state embedded in London. Edit: Somehow managed to write "nationstate" instead of "city-state"
- pphysch 4y agoChance that this is just part of a campaign to short CS? What makes CS different from other major global banks?
- mikece 4y agoSo... move assets to Bitcoin or not?
- golergka 4y agoWe're not yet at the point when crypto does look a lot safer than bank deposits. But we might get there soon.
- pjkundert 4y agoIn Canada, we most certainly are.
- nytesky 4y agoWhat? Canada had one of the safest banking systems in the world and didn’t need bailouts in 2008? Now crypto seems safer, why?
- progrus 4y agoFor one thing, the government can’t freeze the accounts of its opposition, like Trudeau did with the trucker protest.
- ceejayoz 4y agoSure they can, and did. https://www.vice.com/en/article/jgmnpd/the-freedom-convoy-bitcoin-donations-have-been-frozen-and-seized https://www.vice.com/en/article/jgmnpd/the-freedom-convoy-bi... Many cryptocurrencies even build the functionality in directly. Tether, for example, can blacklist tokens: https://www.coindesk.com/business/2022/11/10/tether-freezes-46m-of-usdt-following-law-enforcement-request/ https://www.coindesk.com/business/2022/11/10/tether-freezes-...
- progrus 4y agoWe’re talking about future bitcoin world, not the past. > Many truckers now can’t cash out their donated bitcoin due to financial sanctions, with some of the bitcoins being seized from NobodyCaribou by the authorities. ”What are you saying, that I can convert bitcoin to dollars with impunity?” “No, Neo - I’m saying that when you’re ready, you won’t have to.”
- TacticalCoder 4y agoSomething I wonder is... With $1.3 trillion assets under management, is it safe to say that Crédit Suisse's situation has nothing to do with Bitcoin? I'm asking because about 15 years after the last big financial crisis, one of the systemic bank risking default and potentially in need of a bail out reminds me of a headline from 2008: "(The Times 03/Jan/2009) Chancellor on brink of second bailout for banks"
- once_inc 4y agoIt isn't. Bitcoin isn't nearly big enough to cause systemic problems of banks, especially since most banks either don't have legal access to it, or because they don't see it as a valuable investment. Please note that while Bitcoin is mostly built to counter central banking, it also heavily encroaches on the traditional yield generating business that banks serve to the people: storing wealth. With bitcoin, (excepting mining fees) you don't have to pay for storage or services. You don't run a counterparty risk, and you can keep a moderate level of privacy.
- anonu 4y agoRight now you can buy the whole company for $10bn. Seems cheap. Their building on Madison square Park in NYC is probably worth a $1bn
- tgma 4y agoHas assets? Sure. Has liabilities?
- jeron 4y agoCredit Suisse was a real estate play all along. Was Neumann involved?
- hn_throwaway_99 4y agoFolks need to understand the difference between market cap and enterprise value. To buy a company, you don't only have to buy the shares of stock, you also have to assume all their liabilities. True, liabilities should be less than assets. But that's why banks are freaking out in the first place.
- abm53 4y agoCan you explain what you mean by “assume all their liabilities” in practical terms?
- deleted 4y ago
- throwawaycs1 4y agoMost of the business can't survive without tax payers money in one way or another.
- anigbrowl 4y agoSwiss National Bank says they'll cover CS. https://www.semafor.com/article/03/15/2023/credit-suisse-banking-chaos-what-you-need-to-know https://www.semafor.com/article/03/15/2023/credit-suisse-ban...
- acchow 4y agoBut CS says firmly that they don't need government aid. Are they possibly too entrenched with Russian and drug money that they just can't open their books to the swiss government?
- onlyrealcuzzo 4y agoLoL if you think the Swiss government cares.
- deleted 4y ago[deleted]
- pseudosaid 4y agoSNB, the bank that reported a loss of 100+ Billion last year
- deleted 4y ago[deleted]
- yehudalouis 4y agoMy guess would be that that SNB's backstop and liquidity assistance is a way to bail them out before the inevitable collapse. It may make the medicine go down easier, as CS's collapse looks likely. Upon their demise, SNB can then say "well, great thing we had that backstop, huh!" rather than needing to find the political capital to get a bailout through. Just a guess.
- steponlego 4y agoDB is next. The math is just so bad there, and has been for a decade now, that it's inevitable.
- petre 4y agoMaybe it will get recapitalized with the money confiscated from the Russian oligarchs, just like the Cypriot banks during the Eurozone Crisis.
- mancerayder 4y agoNow it's being bailed out and the market is rallying. Nothing to see here, more of the same. We can't seem to not bail out banks even when they're dumb-dumbs.