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"You can, on the internet, find various expressions of astonishment that a bank as old and important as Credit Suisse turned out to be worth only $3 billion.[3]
by kgwgk 4y ago
"You can, on the internet, find various expressions of astonishment that a bank as old and important as Credit Suisse turned out to be worth only $3 billion.[3] But this is, I think, the wrong way to look at it. Credit Suisse is not worth $3 billion; it is worth half a trillion dollars, more or less.[4] It's just that virtually all of that value — more than 99% of it — belongs to its creditors."
- MichaelZuo 4y agoIs there some additional meaning you want to convey by reposting this quote?
- OJFord 4y agoNot GP, but it's by my reading to show that it's not at all clickbaity, Levine certainly understands your point, and the headline position is reasoned.
- MichaelZuo 4y ago> and the headline position is reasoned. Huh? Doesn't it reinforce the point that UBS paid quite a lot for Credit Suisse?
- OJFord 4y agoI think when you say 'paid' you mean the literal transaction value + liabilities, whereas when Levine says it he means net of liabilities but also assets. Which is a bit different from not thinking about the liabilities at all (the classic layman response to a company bought out of administration for £1) in that it massively affects the scale - while it's not £1 it's still 'nothing', it's a rounding error on the liabilities, I don't have it hand to quote but there was something about 'as you can tell from the fact they tripled (? whatever it was) shareholder payout in a matter of hours'.
- MichaelZuo 4y ago> I think when you say 'paid' you mean the literal transaction value + liabilities That's the dictionary definition. And I imagine what the vast majority of HN readers will have in mind. Hence why I said the headline is clickbaity.
- OJFord 4y agoEven more on the nose, I think: > The upshot of this for UBS is not that it paid CHF 3 billion to buy its historic competitor. The upshot of this is that it has assumed hundreds of billions of francs of liabilities, and taken on a bunch of assets that are probably worth more than that, but it’s hard to tell over a weekend, or ever really.
- chii 4y ago> it’s hard to tell over a weekend, or ever really. they likely have gotten some sort of guarantee on those long dated bond assets from the gov't (either in secret, or something similar), to take on the risk. No business is going to willingly take on liabilities that they dont know, and is unsure they will profit off.