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UBS offers to buy Credit Suisse for up to $1B
- helsinkiandrew 4y agohttps://archive.ph/ypGnI https://archive.ph/ypGnI
- helsinkiandrew 4y ago> The offer was communicated on Sunday morning with a price of SFr0.25 a share to be paid in UBS stock, far below Credit Suisse’s closing price of SFr1.86 on Friday, the people said 1/7 of the Friday closing price - this is heading into the Matt Levine "we will buy your bank, make sure that all your customers are made whole, and give you a Snickers bar in exchange for 100% of the equity" territory
- sys42590 4y agoTo be frank even that very low buying price together with the 6 billion CHF that UBS asked from the Swiss government as a warranty is not enough to cover for the almost unlimited amount of money they may lose in Credit Suisse related US class action and other liability related lawsuits due recent and not so recent events.
- heywhatupboys 4y ago[flagged]
- halJordan 4y agoIt would surprise you to learn that credit suisse is a prime mover of, as well as part & parcel to this financial worldwide bullying scheme you detest?
- RandomLensman 4y agoYou will find that US banks paid huge sums of fines.
- heywhatupboys 4y agoyes, just like police brutality also happens to White people. Doesn't mean there isn't systemic mistreatment of other groups
- RandomLensman 4y agoDo you have evidence that foreign banks are fined more severely for the same behavior (in the infringement and after)?
- mardifoufs 4y agoAre you comparing the treatment of a huge international bank that has a reputation for being more... reckless about regulations to how afroamericans experience systemic racism? Lmfao what? Even if we agree with that ridiculous premise, can you show me any example or a statistic showing that the US targets european banks more than it does those in US? Is the EU international bullies too for fining american big tech? Poor google!
- chollida1 4y ago> yet again, the US proves a financial world wide bully, targeting "foreign" banks but letting domestic ones get an easy pass I'm pretty involved in this world and I can't imagine how you see this happening. What about a swiss bank buying another swiss bank involves the US here? Can you flesh out your point a bit more here because I'm not following this at all
- heywhatupboys 4y agoi was replying to this part "the almost unlimited amount of money they may lose in Credit Suisse related US class action and other liability related lawsuits due recent and not so recent events."
- kasey_junk 4y agoCredit Suisse was found guilty of money laundering last year by a Swiss court. France fined them over 200 million dollars last year in a completely separate incident. They’ve been on a multi-decade corruption and bad investment binge. There are probably good examples of the US banking system bullying foreign banks but this isn’t one. Don’t die on the “no actually Credit Suisse is the victim” hill.
- HWR_14 4y agoSo a Swiss company doing business in the US having to pay US fines for violations of US law is some weird imperialism? Wait until I tell Apple they can ignore the EU's rules on USB-C. They'll be ecstatic. And Starlibj can just beaming internet to Beijing and Moscow! Not an EU/Chinese/Russian company, so the laws don't apply!
- simple-thoughts 4y ago> What about a swiss bank buying another swiss bank involves the US here? Fed reserve swap line. Are you really involved? Kind of basics here. https://www.reuters.com/markets/europe/swiss-national-bank-makes-another-large-draw-fed-swap-line-2022-10-13/ https://www.reuters.com/markets/europe/swiss-national-bank-m...
- bsuvc 4y ago"how can I make this about how I hate the US?"
- mdasen 4y agoThat's likely why the offer is so low. The $1B doesn't go toward covering any potential losses. The $1B would go to Credit Suisse shareholders and then UBS would own the company and be on the hook for the liabilities. To put it another way, the deal's complete price is $1B in cash plus whatever the liabilities are.
- JanSt 4y agoConventional wosdom would say that liabilities were already priced in
- baskethead 4y agoWhy would UBS take on potentially unlimited amount of liability? That doesn't make sense at all.
- HWR_14 4y agoIn the US the government can step in and force you to take that offer. Specifically, they can tell you if you don't accept it the FDIC can take over your bank and auction it off for maybe the snickers bar. Is there such a mechanism in Switzerland? Because at "a snickers bar", a lot of people wouldn't sell out even though it's better for all their depositors. They may be tempted to roll the dice and hope for a giant win. After all, they get way more upside and it's not their money (primarily) they are risking
- andylynch 4y agoIn practical terms no - UBS is by far the largest Swiss bank followed at some distance now by Credit Suisse, and together they are on quick look larger by asset size then all other Swiss banks _combined_.
- H8crilA 4y agoWhether or not a company is bankrupt is not and should not be decided by the shareholders. If it was decided by them they would obviously never declare it bankrupt. The mechanism for "getting paid with a snickers bar" is just a streamlined but still fair version of a restructuring bankruptcy. In a bankruptcy all of the equity gets wiped out and the shareholders no longer have a say in the matters. Morally because they failed to run the company, but also because they positioned themselves to take the greatest gains, and thus should be exposed to absorb the greatest losses. It's not so much specific to any country as it is to the very idea of capitalism / being a shareholder. The fact that a banking regulator gets involved and orders this or that does not necessarily change the fundamental way in which things would happen to another non-bank corporation. Equity would get wiped out, sometimes together with the least secured credit - see "fulcrum security".
- drexlspivey 4y agoCurrent market cap $7B, one year ago $30B. The largest shareholder who owns 10% of the company was asked if he was going to put up more cash last week and he categorically said he won't. This arguably started/accelerated the fall, he probably regrets that now.
- jasode 4y ago>The largest shareholder who owns 10% of the company was asked if he was going to put up more cash last week and he categorically said he won't. This arguably started/accelerated the fall, he probably regrets that now. All-In Podcast said that a plausible reason for the Saudi Arabian investor capping at 9.9% was due to government regulations. Deep link : https://www.youtube.com/watch?v=yYwfiqYocc0&t=11m20s https://www.youtube.com/watch?v=yYwfiqYocc0&t=11m20s That said, I have no idea if the government rules about owning more than 10% is just a minor inconvenience or A Really Big Deal.
- mastax 4y agoThe investor in question brought that up right after saying "absolutely not." The problem is: he said "absolutely not."
- HlessClaudesman 4y ago"Credit Suisse has spent the last decade finding astonishing new ways to lose money and embarrass itself (...) It's failings have included a criminal conviction for allowing drug dealers to launder money in Bulgaria, entanglement in a Mozambique corruption case, a spying scandal involving a former employee and an executive and a massive leak of client data to the media, (...) not to mention its losses on the Archegos and Greensill scandals." Matt Levine is a treasure.
- revelio 4y agoThe spying scandal didn't involve "an executive" and "a former employee", it involved the CEO and several senior executives. Tidjane Thiam resigned in 2020 over it whilst denying wrongdoing, and was CEO at the time a lot of these problems built up.
- Jenk 4y agoThe "former employee" in that scandal (Iqbal Khan) is now at UBS.
- paxys 4y agoNothing too surprising here. Just the Swiss being Swiss.
- revelio 4y agoTo follow up from my sibling comment, Tidjane Thiam (CEO 2015-2020) is not Swiss. He's French Ivorian.
- tootie 4y agoHeadline just updated to say a deal was done at 0.50 (a bit over $2B)!
- rspoerri 4y agoThe official number from the press conference is 3 billion Swiss Franks (CHF).
- newaccount2023 4y agoCS would be insane to accept that price Their CEO can just turn this into a game of chicken, since it is the depositors who are at risk, not him And if the sale is being forced, why even offer $1 billion? Just threaten jail time and take CS for free
- markus_zhang 4y agoI think you cannot say that in public (jail time)
- xwolfi 4y agoCS is already worthless, there s no upside for UBS at all, except to keep their swiss charter because the gov threaten them...
- drexlspivey 4y ago> UBS has offered to buy Credit Suisse for up to $1bn, with Swiss authorities planning to change the country’s laws to bypass a shareholder vote on the transaction as they rush to finalise a deal before Monday. They don't get to say no
- newaccount2023 4y agoThen CS should force the price to $0 and let their shareholders vent fury on regulators Once again, it makes sense for CS to let this go scorched-earth
- brookst 4y agoWhat’s the upside? CS managers get a reputation for being emotional toddlers who can’t be trusted near anyone’s money ever again? Intentionally producing a worse outcome for your own shareholders in the hopes you can blame someone else just doesn’t seem like a very sane thing to do.
- rrgok 4y agoI don't understand, can the government change the law as they wish any time they wish? The last I heard, Switzerland is a democracy.
- moneywoes 4y agoWhat an insult
- rafaelturk 4y agoindeed. but reality sucks.
- mikl 4y agoGiven how much of a shit-show Debit Suisse has been lately, I’m not sure I’d buy them, even for 1 billion Zimbabwe dollars. Who knows how many more skeletons those closets contain?
- xwolfi 4y agoAnd UBS has its own issues to deal with as well.
- neural_thing 4y ago"UBS has also insisted on a material adverse change that voids the deal if its credit default spreads jump by 100 basis points or more, they added." Sounds like they want a way out of this deal.
- neural_thing 4y agoAnd now Credit Suisse is pushing back on the deal. Is anyone else reminiscing? https://www.nytimes.com/2008/03/24/business/24deal-web.html https://www.nytimes.com/2008/03/24/business/24deal-web.html
- deleted 4y ago[deleted]
- monkeydust 4y agoThat's not much given recent volatility in their spreads, a further bargaining tool I guess
- riffraff 4y agoWorth noting that UBS itself was propped up by the swiss government during the great financial crisis (tho I think the government/central bank ended up profiting from the deal).
- xwolfi 4y agoOfc they profitted, it was a loan, like in the US, so with interest. I like how american hairdressers who barely pay a dime of tax like to vehemently point the finger at the mean banks "they" "bailed out", but no tax money has been lost in these loans...
- ourmandave 4y agoThe hairdressers are complaining the tax payer had to front them in the first place. The Fed's got our back, lets try crypto and see how that goes. Just have to repeal that pesky Dodd-Frank thing, and it's back to the fuckery.
- cjbgkagh 4y agoTax funded bail outs are never at fair market value, if they were the market would have done the bail out. Giving a risky venture low interest loans is the same as giving them free money.
- jeffrallen 4y agoCredit Suisse is such an embarrassment, the Swiss government should buy it just to take the "Suisse" out of its name.
- almog 4y agoFor perspective, Credit Suisse market cap is (on paper at least) around $8 bln.
- RandomLensman 4y agoIs or was, i.e., is there a market today beyond UBS' offer?
- andylynch 4y agoI would be surprised, that almost certainly would involve nationalisation, or the SNB approving the sale of Switzerland’s second largest bank to a foreign buyer. Though I could see it being split up and maybe the IB going abroad.
- almog 4y agoThat number is based on its Friday closing price of total shares outstanding times the market price of a common share. Such offer by itself would probably be enough to drive the share price given where things seems to be headed.
- cowl 4y agoFor even more relevant perspective, the Market Cap one year ago was 30bln. Given that they went from 30 to 8 in one year, is it suprising that they go from 8 to 1 in one month?
- loeg 4y agoYes! Huge deviations from the current market cap are always surprising! If the market expected them to go to $1B in a month, the current market cap would not be $8B.
- AbrahamParangi 4y agoWell, it depends how you ask the question right? The statements: 1. The market considers that in the future the company will be worth (on avg) $8B. 2. There is a 20% chance the company is (effectively) dead in a month. - these statements are not necessarily in contradiction (although going one level deeper, I personally think catastrophic risk is often not fully reflected in asset prices)
- fithisux 4y agoOK, now I feel very safe. Thank you UBS you stepped in with you professional halo effect. Thanks!!! Appreciated!!! I feel very super extra safe now!!!!
- xwolfi 4y agoWhat are you saying exactly? That UBS should just refuse ?
- antibasilisk 4y agoNo, he's saying that this is an alarming situation
- marban 4y agoDefinitely a better deal than Twitter.
- fairity 4y agoCredit Suisse needs to get another party to the negotiating table. Time is working against them and UBS has all the leverage. Low-balling makes sense if you’re CS’s only option.
- xwolfi 4y agoThe gov doesnt want foreigners, and UBS is the only bigger bank there. And CS is worthless anyway, the brand is just toxic, so the price will never be higher. They lost last year the same as what UBS made. If they merge and nothing changes, you have 130 000 employees working towards making 0 profit.
- mpweiher 4y agoIf you look at the article, UBS does not want this deal. The Swiss government is effectively forcing them to buy. So the chances of there being another interested party are ... low.
- swarnie 4y agoOoof, i've lost a considerable amount of money lol
- fancyfredbot 4y agoLet's just have one bank and be done with it.
- seydor 4y agobitcoin?
- drdrey 4y agowhat about a bank where you can get a loan?
- benjaminwootton 4y agoEthereum?
- zabzonk 4y agoWould not the prices of their office buildings/leases be worth this alone, given they will be all in major financial hubs? Do they actually have any liquidity?
- NotYourLawyer 4y agoYou’re just looking at assets. Don’t forget liabilities.
- arkad 4y agoIt's funny how this is a common fallacy. I thought exactly the same when Barings Bank was sold for one British Pound back in 1995 [1]. [1] - https://www.investopedia.com/terms/b/baringsbank.asp https://www.investopedia.com/terms/b/baringsbank.asp
- kgwgk 4y agoThey are not buying the buildings alone. They are buying loads of debt as well - and other assets which may or may not be enough to cover the debts.
- Ekaros 4y agoAnd unlike SVB, they are actually one of the players in derivative market. And whatever goes on there. And multipliers in there are big compared to their value as company.
- lordnacho 4y agoI suspect the problem is they don't actually know what they are buying. Not every financial institution has reporting systems that are, how should we say it, modern. When I worked with CS they had a mountain of corporate entities. Just dozens of businesses that were pretty hard to do paperwork for, and even as a going concern it was confusing. Now with bankruptcy eminent, it is not any easier to know what is where. I get this feeling they actually have no idea what CS has in terms of assets and liabilities. This is why UBS has that clause about the CDS, if they buy the bag of junk there could be some bomb inside it.
- busterarm 4y agoI remember a couple of decades ago when my brother was working for JPMC. At the time they were an amalgamation of 13 or so large regional banks. They maintained the systems and the departments (like IT, etc) for all of the separate banks and had long-term plans to unify everything that never made any progress. Each banks' departments realized that if they did the work laid out for them that the axe was to follow so they all delayed and delayed and delayed and fought with each other for relevance. My brother was brought in to work exclusively on backups and to wrangle 13 different IT teams doing backups into compliance. They made sure that he didn't get his laptop to start doing his job for a full six months. Every department's backups failed every day. Every department had excuses for not being able to do the remediation work. After a couple of years of collecting a paycheck and making no progress he left and used the money to start his own business. I still wonder how much progress they have made to this day.
- newsclues 4y agoAre these banking issues tied to the Russia-Ukraine Conflict? Will the Swiss start selling arms to the Ukraine to make up for this lost capital?
- hestefisk 4y agoUnlikely.
- andylynch 4y agoNo. CS has had serious problems for many years.
- Ekaros 4y agoOnly so much as inflation is tied to that. I think it is just that the globally economy was pumped up and now things are forced to slow and free money is not available anymore. Thus things get real. And you can't hide your messes under expanding credit anymore.
- seydor 4y agoCredit Suisse says no . beggars can be choosers
- ar9av 4y agoImagine being Saudi Arabia's National Bank >Saudi Arabia's National Bank, which acquired 9.88% of Credit Suisse shares last year, said it would not buy more shares on regulatory grounds. >"We cannot because we would go above 10%. It’s a regulatory issue," Saudi National Bank chairman, Ammar Al Khudairy said on the sidelines of a conference in the Saudi capital, Riyadh, on Wednesday. >Al Khudairy said the value realisation of that investment will unfold as the Swiss bank proves they are doing the turnaround. >"We are happy with the plan, the transformation plan that they have put forward. It is a very strong bank," he said. >"I don't think they will need extra money; if you look at their ratios, they're fine. And they operate under a strong regulatory regime in Switzerland and in other countries," he told the Reuters news agency. His comment will go into the history books for shutting up when your money is on the line.
- belter 4y agoNext... Luxembourg AAA Rating...
- mcintyre1994 4y agoLooks like they paid about $1.5 billion for that stake last year if anyone's interested! https://www.cnbc.com/2022/10/31/credit-suisse-shares-are-a-steal-say-new-saudi-backers-snb.html https://www.cnbc.com/2022/10/31/credit-suisse-shares-are-a-s...
- somedude895 4y ago>>Saudi Arabia's National Bank, which acquired 9.88% of Credit Suisse shares last year, said it would not buy more shares on regulatory grounds. >His comment will go into the history books for shutting up when your money is on the line. He didn't just say "for regulatory reasons." He started with "Absolutely not" and it almost sounds like he added the regulatory part because he realized he screwed up: https://youtu.be/q0So9sqLLfY?t=127 https://youtu.be/q0So9sqLLfY?t=127
- Alifatisk 4y agoWhat’s the reason of acquiring 9,88% instead of 10%?
- m3kw9 4y agoThis is like a high leverage option trade except there is both unlimited downside and upside.
- sschueller 4y agoLatest news indicates that CS has rejected the deal. At this point if there is no deal by the end of the day the government is considering taking parts or the entire bank[1]. Although this would be a huge hit for the tax payer, at this point I think it would be much better. The Swiss government can also push back harder on any future liabilities that come at the bank from old dealings. By nationalizing the bank they will effectively prevent a global financial crisis. If UBS acquires this bank a lot of jobs are redundant and there is effectively only one large bank left. The Bundesrat[2] is expected give a media conference later today. [1] https://www.bloomberg.com/news/articles/2023-03-19/switzerland-weighs-full-or-partial-credit-suisse-nationalization?srnd=premium-europe https://www.bloomberg.com/news/articles/2023-03-19/switzerla... [2] https://www.youtube.com/@gov-ch/streams https://www.youtube.com/@gov-ch/streams
- deleted 4y ago[deleted]
- andylynch 4y agoI just hope the combined entity’s name is a variant of ‘United Swiss Bank Corporation’ not already used by one of its predecessors!
- aobdev 4y agoUSB-C?
- sschueller 4y agoSKA, then my hat[1] will be relevant again. Also the gold signage on the building windows[2] would be correct again (can't be removed because of historic protection). [1] https://cdn.unitycms.io/images/19gT0AyGKZW9w8bI-N6GQe.jpg https://cdn.unitycms.io/images/19gT0AyGKZW9w8bI-N6GQe.jpg [2] https://www.cash.ch/fp/1335/751/2016/1512/sites/default/files/images/library/credit_suisse_cs_bank_paradeplatz_zurich_ska.jpg https://www.cash.ch/fp/1335/751/2016/1512/sites/default/file...
- Redoubts 4y agoWhy is this better than parting up the company in bankruptcy court or receivership? (Or whatever the Swiss analog is).
- kgwgk 4y agoWith this tomorrow will be business-as-usual. Much more than in any other alternative, at least.
- lordnacho 4y agoBecause in a bankruptcy stuff stops. Everyday processes get interrupted, and the administrator needs to tally up the balance sheet and sell off what they can to creditors. It's not just some widget factory, it has connections all over the world but ofc also quite a lot in Switzerland itself. You don't really want one of your two biggest banks to cease trading.
- curiousgal 4y agoNot to mention the CDS/Structured credit market frenzy that would ensue.
- JCM9 4y agoUBS is basically buying an abandoned storage locker at this stage. At this point Credit Suisse is mostly junk and may be worthless but UBS might be able to find a few things of value in there to make it worth their time and money. Sad to see such a long-standing global company end like this. Credit Suisse suffered from years of terrible leadership and bad decisions so I suppose this is preferable to just an outright collapse.
- Jenk 4y ago$1b for Credit Suisse feels like they already did collapse and UBS are making an offer for the rubble.
- baskethead 4y agoIt's buying an abandoned storage locker with potentially leaking chemical waste that has could have been poisoning the ground water and killing people the next town over for decades.
- psychlops 4y ago"Swiss authorities poised to change the country’s laws to bypass a shareholder vote" This part of the article is horrifying.
- alex_suzuki 4y agoAs a Swiss citizen, I wholeheartedly agree.
- HDThoreaun 4y agoHas to mean CS is facing eminent collapse right? Or maybe they’re just worried shareholders would reject in hope of a miracle since they dont suffer in the downside.
- Animats 4y agoThis seems so out of character for Switzerland. Would anyone from Switzerland care to comment? Switzerland has bank insurance, but it's not government-backed. It's funded by the banks as a group. The limit is 100,000 CHF (about US$108,000) per customer. Swiss banks are not, in general, backed up by the Swiss government in the way that the FDIC and Fed back up US banks. It's surprising to see a "too big to fail" approach from Switzerland. But if Switzerland let Credit Suisse go under, nobody outside Switzerland would put money in Swiss banks any more.
- JumpCrisscross 4y ago> if Switzerland let Credit Suisse go under, nobody outside Switzerland would put money in Swiss banks any more Switzerland’s private banks are fine. Problem is CS does a lot of plumbing, in Switzerland and internationally.
- j_mo 4y agoTwo duplicates of this on the front page of HN, annnddd both are behind paywalls :(
- gtsnexp 4y agoThis marks the first instance in history where the Swiss government has utilized a financial backstop to restore confidence in the international financial market.