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UBS agrees to buy Credit Suisse
- sschueller 4y agohttps://archive.ph/0ETzn https://archive.ph/0ETzn
- jesterman 4y agoNot sure why, but that link isn't loading for me. https://archive.is/0ETzn https://archive.is/0ETzn
- sschueller 4y agoThe Swiss Bundesrat (Alain Berset and Karin Keller-Sutter), Finma (Marlene Amstad), SNB (Thomas Jordan), UBS Group (Colm Kelleher) and CS (Axel Lehmann) will give a media conference at 19:30 Swiss time. The fact that UBS is present should more or less confirm that there is a deal between CS and UBS. Latest reports also state that the SNB is going to be providing 100B in liquidity to UBS if they need it. https://www.youtube.com/watch?v=gmT0-w_0Ex4 https://www.youtube.com/watch?v=gmT0-w_0Ex4
- sixhobbits 4y agoAnyone have more information on the "emergency measures" that the Swiss govt used to skip the 6-week shareholder approval period? Couldn't find more information in English apart from the fact that they were being used and it seems very unlike Switzerland which has a reputation for very slow moving politics in general.
- sschueller 4y agoI assume that will be asked and answered at the press conference in 40 minutes from now.
- raverbashing 4y agoThey probably said to the board "if you wait 6 weeks there will be no bank anymore" and I think that they understood that. It's that simple. Either they get a % of something or 100% of 0. Especially since now the purchase price went to $2Bi.
- bagacrap 4y agoNobody asked the board. They pushed through a legislative change overnight.
- jesterman 4y agoThey will be paying just 9% of the market cap from a week ago. EDIT: This is likely wrong, it's probably more like 20+%, I was using the $.27 a stock from an earlier price of about 1 billion. It appears that the actual price is more than 2 billion.
- stefan_ 4y agoAnd yet, since they are the only buyer and had to be strongarmed into it, they are probably paying 9% of market cap too much!
- orra 4y agoWhy has this been downvoted? Is it speculation?
- jesterman 4y ago9% is probably wrong, it was using an earlier figure of less than or about 1 billion, when the actual figure is more than 2 billion.
- kzrdude 4y agoYes, I read the price was suggested as 0.25 CHF and then doubled to 0.50 CHF per share for the deal.
- cm2187 4y agoBut will it end the bank runs or will the panic just move on to the next bank? For those who lived 2008, it feels so deja vu.
- AnimalMuppet 4y agoNo, to me it doesn't feel like 2008. It's kind of in that direction, but this is nowhere near as bad. In 2008, I was on a hair trigger. Then, I was prepared to take emergency action within 24 hours. This time around, I'm not there... yet.
- deleted 4y ago[deleted]
- Zetice 4y agoBank runs are psychological in modern times; my next worry is that the news machine has begun to nibble on midsize banks, so that may be the next victim that gets devoured for content.
- cm2187 4y agoThere are a few other large banks that have also their lot of challenges. At this stage, as you say, it is an irrational panic. CS was well capitalised by any modern standard and it would have required massive losses before creditors and depositors were seriously exposed. But no bank can resist a large enough bank run.
- markus_zhang 4y agoI'm glad they managed to get something done before Asia wakes up. We are pretty much dependent on a relatively stable financial market. TBH I'm a bit scared that a financial meltdown is imminent and many of us will lose jobs in a sudden.
- ericpauley 4y ago> institution known for Swiss stability Hah! https://en.wikipedia.org/wiki/Credit_Suisse#Controversies https://en.wikipedia.org/wiki/Credit_Suisse#Controversies
- waynesonfire 4y agogood riddance.
- lvl102 4y agoThis deal stinks of panic. I know they’re rushing to calm the market but I think it will have the opposite Streisand effect. Last week it was 30B CHF now they’re throwing 100B CHF to make it work? Something is terribly wrong with CS book.
- throway514 4y agoSorry, I can’t see anywhere in the article where they mention 100B. I’m I misunderstanding something?
- _trampeltier 4y agoIt's just for liquidity. If someone want's money, the banc can't give them a part of a house (where they give the credit).
- rspoerri 4y ago100 Billion Swiss Franks (CHF) is the safety the National Bank is providing to Credit Suisse and UBS. It is not the purchase price. The purchase price is 3B CHF.
- lvl102 4y agoYes, and last week the backstop was 30B CHF. So why did they increase that by more than 3x within days? Makes no sense other than UBS finally looked at the books and freaked out.
- worrycue 4y agoMan, this was more serious than I thought. They rushed to get the whole thing done during the weekend and pushed it through bypassing all the shareholders. This year is getting worse by the minute. Insane inflation killing many industries. AI threatening to take jobs - and probably actually taking a few art jobs. Now cascading bank runs and the end of one of the oldest banks in the world as an independent entity.
- baq 4y agoWhat a week right?
- koolba 4y agoThe week is just starting…
- layer8 4y agoNot in Europe: https://c.tadst.com/gfx/1200x675/map--first-day-of-the-week.png https://c.tadst.com/gfx/1200x675/map--first-day-of-the-week....
- rvz 4y agoIt is just the beginning. It can affect even some ‘Systemically important banks’. Perhaps CS was the unsafest SIB of them all. They are ‘Too big to fail’ until they fail.
- lmm 4y agoCS has been lurching from crisis to crisis for as long as I can remember. The tide doesn't have to go out very far when they've been swimming naked for years now.
- tempsy 4y ago…what industries are being killed by “insane inflation”? ironically long duration tech stocks and crypto have been surging all year and outperforming basically every other sector
- DueDilligence 4y ago[dead]
- noja 4y agoMaking an even bigger bank is no fix, it's a workaround.
- Covzire 4y agoInteresting ongoing Twitter space with several Financial Industry veterans discussing this. Going as of 1:30 Central and will probably go at least another 2 hours. Mario usually gets some fairly large names to show up. https://twitter.com/MarioNawfal https://twitter.com/MarioNawfal
- surfsvammel 4y agoI thought UBS explicitly said they did not want to buy CS.
- GenerWork 4y agoThey probably didn't/don't want to. I assume that there was a fair bit of arm twisting behind the scenes.
- rspoerri 4y agoThey will be secured with 9B CHF in case the losses are bigger then some unknown number.
- drexlspivey 4y agoThey don’t want CS to go under either
- gimmeThaBeet 4y agoThey probably didn't snd still don't. If JPM buying Bear Sterns is any metric, I would be worried that the government would 'ask' me to rescue another bank, and then take me to court over it for the next decade. It's understandable people are mad at the banks and don't want taxpayer money propping up for-profit institutions. But what is the rationale for coaxing companies into taking risks at their behest that they basically know is going to be worse than you think going in?
- fiftyacorn 4y agoThis is the problem with banking - they mess up, get bought buy a competitor to sweep the problem under the carpet and kick the can down. this reduces competitors in the marketplace. Eventually there is a state bailout
- worrycue 4y agoThere is already a state bailout. CS got loaned $54B. UBS got guaranteed another $100B loan for buying CS - and I read from another post (https://news.ycombinator.com/item?id=35222147 https://news.ycombinator.com/item?id=35222147) the state will cover up to $9B in losses from the buyout.
- fiftyacorn 4y agoI was including that - the issue to me is that banking needs better regulation to stop them getting into this situation in the first place
- Waterluvian 4y agoI wonder if there’s anything to learn from the Canadian banking industry, which, through regulation, basically didn’t participate in the 2008 collapse and seems to be in fine shape during all this. (Or maybe it’s not and we’re up next!)
- moltar 4y agoJust wait until the RE bubble collapse and we’ll see. There’s a ton of mortgage fraud not to mention the risk of defaults. Everyone is so strained.
- HDThoreaun 4y agoCS’s shareholders lost all their money. Most employees will be fired. I don’t see how this is a good outcome for cs at all.
- g42gregory 4y agoI love the Bloomberg headline. It does not say "... in Historic Deal to End the Credit Suisse Crisis." Instead, it says "... in Historic Deal to End Crisis." On the remote chance that you thought there might be some sort of global bank crisis, Bloomberg tells you that it is already ending. Since Bloomberg tries to manipulate people's perception so openly (most people do not read beyond the headline), this makes me even more worried. What else its out there that they don't want me to know?
- JumpCrisscross 4y ago> What else its out there that they don't want me to know? If only Bloomberg News had competitors.
- g42gregory 4y agoBut is it possible to refer to them here?
- JumpCrisscross 4y agoMainstreams are the Journal and Financial Times, but practically every genre has droves of researchers cranking out everything from the questionable to prescient. (Almost universally, free blogs are the former.)
- g42gregory 4y agoYou are not saying that WSJ has anything to do with truthful reporting or investigative journalism? FT used to be better, but I think now descended to the same level. You can used them to gauge the current market sentiment or the sentiment they are trying to push, but certainly not the financial reality/truth. You get periodic bright spots like Theranos reporting, but that’s rare.
- JumpCrisscross 4y agoSkip the opinion section and headlines. The meat of both papers is solid, with ongoing investigative journalism. After that, you need to pay up for industry periodicals, et cetera.
- expertentipp 4y ago> Historic Deal to End Crisis > End > Crisis Shit's starting. Fasten your seat belts. One week from now things will be different.
- nemo44x 4y agoIndeed. I think a lot of people are unaware or misinformed than hundreds of banks are insolvent right now. Something like 700B in deposits were pulled last week and that will accelerate. 50% of existing mortgages were written between 2020 and 2022 at around 3% interest at 30 years. The banks holding all those are underwater as interest rates on much safer treasuries are higher. Imagine if we start to see a bit of defaulting on those mortgages! Mix in all the long dates treasuries they’re sitting on. The FDIC doesn't have enough money to even cover the <250k deposits at the hundreds of banks that are insolvent when marked to market. So we’ll either see emergency rate cuts which will increase inflation or we see the fed ignite it and the system collapses. Or they print money to backstop it all resulting in more inflation. Possibly hyper inflation.
- deleted 4y ago[deleted]
- loeg 4y agoI don't know about other borrowers but my 2.5% 2020 mortgage was sold to (government owned) Fannie Mae (or Freddie Mac, I forget which) more or less immediately.
- nemo44x 4y agoThat’s maybe half of existing mortgages but the problem has been that banks sell to Freddie to get cash to loan. Well, loan demand was incredibly low. So they bought bonds and held onto mortgages. Also keep in mind many mortgages are non-conforming so Freddie can’t buy them.
- wombatpm 4y agoSame here. And I’m never going to default on a 2% loan. Hell I may never sell again unless I can pay cash, because I never want an 8% mortgage again
- trosi 4y agoWow, I did not expect that to happen basically overnight. I guess FINMA and the Swiss government were really fed up with the CS shenanigans.
- TheBlight 4y ago"to End Crisis" ah it's over is it?
- rspoerri 4y agoPurchase price is 3 Billion Swiss Franks. Kaufpreis ist 3 Milliarden Schweizer Franken.
- deleted 4y ago[deleted]
- JumpinJack_Cash 4y agoWe are still flattening the curve. What is happening right now is the byproduct of governments not wanting to face an economic crisis and a health crisis at the same time. Now the health crisis is over (or better yet the panic around COVID has subsided) now we have to face the economic crisis that comes with closing down the world for 2 years. We have only just pulled that forward. There is no free lunch.
- aaa_aaa 4y agoExcept both crises were caused or amplified by the governments. Not "we".
- somewhereoutth 4y agoThe world wasn't closed down for 2 years. However, governments used monetary policy much too aggressively (printing money) whereas they should have been using fiscal policy (taxing rich people). Now comes the reckoning.
- postingawayonhn 4y ago> There is no free lunch. Exactly, the lost production due to lockdowns and massive government stimulus wasn't free. We're paying for it now.
- bluecalm 4y agoPretty scary that our financial system can't take a few weeks of deliberation and the deal needs to rushed during the weekend. Instead of general ranting I would like to learn who exactly goes bust if we allow the uncertainty for a few weeks? Is it more than just a gift to shareholders and market speculators?
- fancyfredbot 4y agoCS probably goes bust as everyone pulls their money out, and has to sell all of their assets at fire sale prices. If they lose more than their capital buffer then people may not get their money back. That then has knock on effects which are harder to predict but might include other small banks with exposure to CS (and in the worst case, even other large banks).
- s-xyz 4y agoJust writing down here as a memoir looking back at this news in 10 years, as we look back now on the fall of Lehman in 2008 - we can say that “we were there…”
- onlypositive 4y agoPut me in the movie!
- underlines 4y agoLivestream in English/German with Swiss Govt., Finma, National Bank, UBS Group and CreditSuisse right now: https://www.20min.ch/story/jetzt-informiert-der-bundesrat-ueber-den-cs-deal-943868196474 https://www.20min.ch/story/jetzt-informiert-der-bundesrat-ue...
- daydream 4y ago“UBS Group AG Chairman Colm Kelleher said he will rein in Credit Suisse Group AG’s investment bank, a unit that has racked up losses in recent years. “Let me be very specific on this: UBS intends to downsize Credit Suisse’s investment banking business and align it with our conservative risk culture,” Kelleher said Sunday at a press conference announcing the deal.” — https://www.bloomberg.com/news/articles/2023-03-19/ubs-s-chairman-vows-to-shrink-credit-suisse-s-investment-bank https://www.bloomberg.com/news/articles/2023-03-19/ubs-s-cha... Oof. Sounds like a lot of CS investment bankers are going to be out of a job soon.
- jeffrallen 4y agoIf keeping your job in investment banking had anything to do with not losing enormous sums of money, they would have already lost their jobs long ago.
- elliotec 4y agoYeah but the key word here is “downsize” - there will be layoffs.
- weard_beard 4y agoBut will they close the positions? Let’s be clear. The investing arm of CS isn’t suffering from too many middle managers or bloated salaries. They lent money to profligate gamblers. It’s speculated their losses could be in the hundreds of billions. Closing out those positions could sway the fortunes of American blue chip stocks and publicly traded companies around the world. Closing CS’s trading arm could reshape the entire US stock market over night.
- ganoushoreilly 4y agoIs it time for the Archegos Tranche of swaps to finally come due? That's been the rumor and if the rumors are close, you're right, it's going to be a doozy.
- 4y ago
- Octokiddie 4y agoIt's far from clear what this buy/bailout does to "end" the crisis. Was the crisis caused by Credit Suisse being too small? > The plan, negotiated in hastily arranged crisis talks over the weekend, seeks to address a massive rout in Credit Suisse stock and bonds over the past week following the collapse of smaller US lenders. A liquidity backstop by the Swiss central bank failed to end a market drama that threatened to send clients or counterparties fleeing, with potential ramifications for the broader industry. This makes more sense. It's an attempt to manipulate world financial markets. But if the deal doesn't address the root cause, the same situation will repeat soon enough. There's also this from a different article: > The deal caps a highly volatile week for Credit Suisse, most notably on Wednesday when its shares plunged to a record low after its largest investor, the Saudi National Bank, said it wouldn’t invest any more money into the bank to avoid tripping regulations that would kick in if its stake rose about 10%. https://www.krqe.com/news/business/swiss-to-hold-news-conference-amid-credit-suisse-troubles/ https://www.krqe.com/news/business/swiss-to-hold-news-confer... So maybe there's something to be gained by making UBS/CS bigger. It allows investment by other private parties that would have otherwise triggered onerous provisions.
- fancyfredbot 4y agoWhat just happened? On Friday CS was borrowing money from the Swiss national bank to buy back it's own debt and their stock seemed stable. They had just published a quarterly report showing a 14.1% CET1 ratio. Why sell at less than half Friday's closing price? Was a bank run in progress?
- m3drano 4y agoJust on Friday they had 10,000 million CHF in outflows. So I guess yes.
- dang 4y agoRecent and related: Switzerland Weighs Full or Partial Credit Suisse Nationalization - https://news.ycombinator.com/item?id=35219363 https://news.ycombinator.com/item?id=35219363 - March 2023 (97 comments) UBS offers to buy Credit Suisse for up to $1B - https://news.ycombinator.com/item?id=35218296 https://news.ycombinator.com/item?id=35218296 - March 2023 (118 comments) UBS in talks to acquire Credit Suisse - https://news.ycombinator.com/item?id=35203775 https://news.ycombinator.com/item?id=35203775 - March 2023 (44 comments) Credit Suisse borrows more than $50B from Swiss National Bank - https://news.ycombinator.com/item?id=35177523 https://news.ycombinator.com/item?id=35177523 - March 2023 (9 comments) Credit Suisse shares fall to record low as top investor rules out more funding - https://news.ycombinator.com/item?id=35169184 https://news.ycombinator.com/item?id=35169184 - March 2023 (4 comments) Credit Suisse sheds nearly 25%, key backer says no more money - https://news.ycombinator.com/item?id=35166892 https://news.ycombinator.com/item?id=35166892 - March 2023 (575 comments) Credit Suisse finds ‘material weakness’ in reporting, scraps exec bonuses - https://news.ycombinator.com/item?id=35151690 https://news.ycombinator.com/item?id=35151690 - March 2023 (98 comments)
- NotYourLawyer 4y ago> Regulator Finma said about 16 billion francs of Credit Suisse bonds will become worthless to ensure private investors help shoulder the costs. That’s a funny way of saying “we’re gonna punish everyone who previously lent money to CS.”
- fancyfredbot 4y agoThat's the risk you take when you lend money. It's why you get paid interest.
- s1artibartfast 4y agoI don't think that is a fair take. When you lend you expect to be paid back unless there is bankruptcy, and then you expect get a place in line for the assets. The situation where someone else gets to buy the assets out, leaving behind the debt seems unorthodox.
- jsemrau 4y agoWhile it might not be fair this is commonly referred to as Market Risk for investors. Failures like SVB or CS are rare which makes them so much more painful.
- NotYourLawyer 4y agoThis buyout is not a normal market transaction.
- blitzar 4y ago> When you lend you expect to be paid back unless there is bankruptcy, and then you expect get a place in line for the assets. They speedran the bankruptcy, hand wringing and liquidation. The line was formed and all the money has already been handed out.
- s1artibartfast 4y ago
- mnadkvlb 4y agoI am a bit surprised and a bit unhappy that last week SNB said they gave a credit line to credit suisse after which i put a bit of money. And in one day after that, they did this merger without a shareholders vote. I would have honestly been happier as a swiss taxpayer and investor in both UBS and CS to lose my money in CS and let this piece of junk fail instead of bundling it to ubs now. Now i get UBS share to ratio 22.48 CS shares to 1 UBS. First thing every investor (including me) in UBS will do tomorrow is to get out of UBS, so even though currently i get say .74 chf per share, i won't be surprised if UBS is down 20% tomorrow or even 50 or who knows how much. I would have been happier, if they just nationalized the bank and unwound it, even if i got less pennies per dollar invested or even zero. Now we will get another bank that will be holding the baggage. Amazing :|
- benjaminwootton 4y agoAny bet on these banks was very speculative. You had a huge upside if things worked out. Instead, you predictably lost the bet and still got paid some compensation in the fire sale. Not a bad play and not a bad outcome if you went in with your eyes open.
- mnadkvlb 4y agoI fully agree, no question about the risk. I would honestly have the investors lose it than depositors. The thing i am unhappy about, to reiterate myself, is bundling CS to UBS. I am invested in UBS as well, and guess what, i will lose way more on that investment due to this forced merger. If the govt. just unwound the assets slowly, it won't affect a relatively healthy bank, which was saved in 2008. I hope i am wrong, but i feel like ubs prices are gonna fall like a knife at the opening tomorrow, unless the SNB starts buying it.
- paganel 4y agoFrom a distance (I don't live in Switzerland and I'm not invested in any shares) this looks like a drowning man (CS) risking to drown its own "saviour" (UBS).
- 4y ago
- adamski007 4y agoWhat a deal UBS is making... Always keep some money aside during a crisis, and be preparer to make some very very good deal !
- benjaminwootton 4y agoYes, they are acquiring a whale of a company at a low price with a lot of government support behind the deal. Imagine how it must feel to acquire your biggest rival in these circumstances.
- jmyeet 4y agoOh great, more corporate consolidation. That'll be great for consumers. Frankly I prefer the US solution of seizing a bank and stripping it for parts.
- heybrendan 4y agoSo what happens to the Archegos bags CS was holding? Why would UBS willingly take on such deep exposure? We're in a weird timeline when the investors on /r/SuperStonk begin accurately predicting the future.
- AnonMO 4y agoPeople have be “predicting” or more like coming to an educated guess using the plethora of public data on these subreddits for many years. I used to be an active poster on wallstreetbets years before the meme stock stuff and there was always people like you who would come after the fact and be like I can’t believe you predicted the future, but they never showed up when I was wrong. It’s only a weird timeline because you probably joined these subreddits after the hype not before.
- heybrendan 4y agoImpressive. You managed to not answer any of my questions. Reddit can and does create echo chambers. But that doesn't mean I wasn't willing to fully acknowledge and concede that this Reddit community was /right/ about this. Dial back your sensitivity. We're on the same side.
- lmm 4y ago> Why would UBS willingly take on such deep exposure? "Willingly" in what sense? I suspect they were heavily leaned on by the Swiss government.
- ganoushoreilly 4y agoMy guess is the exposure is directly related to the 100b/200b (seeing the later now being reported) in backing on the deal should things go south. The real question is, will that be enough if the (swaps) are as bad as /r/superstonk and other believe them to be? I'm going to pop some popcorn and watch it play out either way.
- deleted 4y ago[deleted]
- belter 4y agoAnd 4 days ago the Swiss Financial Market Supervisory Authority regulator said... "...The Swiss National Bank SNB and the Swiss Financial Market Supervisory Authority FINMA assert that the problems of certain banks in the USA do not pose a direct risk of contagion for the Swiss financial markets. The strict capital and liquidity requirements applicable to Swiss financial institutions ensure their stability. Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks. If necessary, the SNB will provide CS with liquidity..." https://www.finma.ch/en/news/2023/03/20230315-mm-statement/ https://www.finma.ch/en/news/2023/03/20230315-mm-statement/
- londons_explore 4y agoOne of the main roles of a regulator, during a crisis, is to loudly say there is no crisis...
- labster 4y agoThe louder they say there’s no crisis, the more convinced I am that there is definitely a crisis.
- deleted 4y ago[deleted]
- simonh 4y agoMargaret Thatcher — "Being powerful is like being a lady. If you have to tell people you are, you aren't." It's the same with bankers and being solvent.
- smsm42 4y agoThis way, nobody would ever believe what regulators say, which is certainly a smart behavior for any responsible citizen.
- 082349872349872 4y agothe SNB did provide CS with liquidity.
- nairboon 4y agoI've heard the same thing 15 years ago, when they bailed out UBS. Now, here we are again. They're even invoking emergency law to ship this deal. We ought to amend the constitution, in two ways: clawbacks for variable compensation in too-big-to-fail banks and add such irresponsible behavior to the criminal code. It is time for prison for those responsible for this fiasco.
- 67m67m67m 4y agoDo you mean the American constitution? Do you have any IDEA what the process is even like to get an amendment in? This suggestion with the knowledge of that process is completely absurd. It will never happen. Also, one nations constitution isn't going to prevent this issue with another nations bank lol.
- Mesopropithecus 4y agoJust wanted to mention that amending the Swiss constitution is near trivial, one could start there :).
- sofixa 4y agoWhy would they be talking about the American constitution? This is a matter between two Swiss banks and Swiss authorities.
- nairboon 4y agoNo, this is about the Swiss constitution. 100k signatures are required to initiate a vote about it. That is quite doable.
- sofixa 4y agoNeither of those two things have a place in the Swiss constitution. One is a criminal matter for the Swiss Criminal Code, and the other is just a banking regulations update.
- nairboon 4y agoThe only way to change the later is by putting it in the constitution in the first place. It's not nice, but it would work. What has the parliament done in the past 15 years? Nothing of substance, otherwise we wouldn't be in the same situation again.
- deleted 4y ago[deleted]
- xyst 4y agoMoral hazards. All of them. This isn’t the first time. It won’t be the last time.