Credit Suisse going bankrupt?

[Martin Everson]

What are AT1 bonds and why are Credit Suisse’s now worthless?​

https://www.msn.com/en-us/money/sav...are-credit-suisse-s-now-worthless/ar-AA18Raqe
WTH!!! Those AT1 (CoCo Bond) holders get nothing yet common equity holders get something. How does that work? Since when did common equity take a higher priority than debt in the capital structure. What the hell is happening in Switzerland with the government? This is a national disgrace and gross incompetence. Let the litigation begin.

P.S And dump all Swiss bank bonds with a bail-in clause immediately....lol. In fact be safe and make that all bank bonds.

 

[JohnnyDoe]

​

P.S And dump all Swiss bank bonds with a bail-in clause immediately....lol. In fact be safe and make that all bank bonds.

be even safer and buy btc.

 

[Martin Everson]

Saudi National Bank strategy unaffected by hit to Credit Suisse investment​

https://www.reuters.com/world/middl...d-by-hit-credit-suisse-investment-2023-03-20/
---- quote start

The Saudi lender, the kingdom's largest by assets, acquired almost 9.9% of Credit Suisse for 5.5 billion riyals ($1.46 billion) last November, but is now sitting on a loss of roughly $1.17 billion on its investment, Reuters calculations showed.

---- quote end

This is obviously nothing to the Saudi's...but ouch .

Recruiters worldwide are inundated with calls from anxious Credit Suisse bankers seeking new jobs amid the UBS takeover, report says​

https://www.msn.com/en-us/money/com...amid-the-ubs-takeover-report-says/ar-AA18Tqlk

 

[JohnnyDoe]

​

Recruiters worldwide are inundated with calls from anxious Credit Suisse bankers seeking new jobs amid the UBS takeover, report says​

https://www.msn.com/en-us/money/com...amid-the-ubs-takeover-report-says/ar-AA18Tqlk

50,000+ monkeys being released from bank captivity.
actual situation in Zurich:

 

[Martin Everson]

Swiss Are On the Hook for $13,500 Each on Credit Suisse Bailout​

https://www.bloomberg.com/news/arti...redit-suisse-bailout-costing-them-13-500-each
---- quote start

Switzerland’s tab for shoring up its reputation as a financial center could run to 12,500 Swiss francs ($13,500) for every man, woman and child in the country.

To backstop the emergency sale of Credit Suisse Group AG to its Zurich rival UBS Group AG, the Swiss government pledged to make as much as 109 billion francs available — a hefty burden for the country of 8.7 million people.

On top of that, there’s a guarantee from the Swiss National Bank of 100 billion francs that isn’t backed by a government guarantee, according to the deal announced Sunday evening.

The combined sum of 209 billion francs is equivalent to about a quarter of Switzerland’s gross domestic product and exceeds total European defense spending in 2021. The price tag for Switzerland’s largest ever corporate rescue could add up to more than three times the 60 billion-franc bailout of UBS in 2008.

--- quote end


This is potentially outrageous numbers for saving a criminal enterprise .

 

[algotrader]

Switzerland’s tab for shoring up its reputation as a financial center could run to 12,500 Swiss francs ($13,500) for every man, woman and child in the country.

Not a big issue for a country that can print as much francs as it wants (there's plenty demand for CHF from abroad especially during periods of crisis). The 50 bln rescue of UBS in 2009 resulted in a profit for the SNB and taxpayer when they sold the bad bank assets later.

I'm not worried about Switzerland but about the rest of Europe should the banking crisis spread because the EU cannot print it's way out of the crisis without causing hyperinflation and a rift between its member states.

 

[pomegranate]

Those AT1 (CoCo Bond) holders get nothing yet common equity holders get something. How does that work?

AT1 bonds (not only Cocos) can be written down in two scenarios: a "Contingency Event" or a "Viability Event".
- In a Contingency Event: the instruments are written down if the CET1 ratio goes below a High Trigger (7%) or Low Trigger (5.125%) depending on the instrument. The CET1 ratio of CS (quite high) did not reach the trigger level. So most likely FINMA (the swiss regulator) relied on the "Viability Event" (we don't know the rationale for sure).
- In a Viability Event the regulator has more flexibility to determine that AT1 should be written down but there are still conditions that must be met. Among key conditions to trigger a Viability Event there should be extraordinary support from the Public Sector in conjunction with this support having the impact of improving capital adequacy. Frankly personally, I think there is a lot to argue the conditions were not met. In layman's terms, how do you say that CS is an unviable business if you sell it for $3bn and continue paying bonuses?

Irrespective of the actual legal rationale, there is also the spirit of the Law. And it is clear that wiping out AT1s and not equity goes against the usual hierarchy of the capital structure. I can imagine plenty of legal proceedings (incl. misselling to Asian PW clients).

When Banco Popular AT1s were wiped out, it created fewer issues in the AT1 market because (1) it was smaller in size and (2) equity holders were also impaired.

Whatever the outcome of all these legal proceedings I see two consequences:
1- Swiss reputation is badly damaged. Their legal framework is seen as unstable. They changed plenty of laws late on Sunday. It would be impossible for their banks to issue AT1s. They didn't maintain a stable and clear regulatory framework at a crucial moment.
2- Funding costs for banks and their cost of equity will significantly increase. AT1s were quite useful but even after the move by other regulators/CBs (ECB, BOE, etc.) to calm the markets, investors will ask (and are already asking) for a premium.

 

[Martin Everson]

Switzerland suddenly looks like a ‘banana republic’ in a crisis​

https://www.afr.com/world/europe/sw...a-banana-republic-in-a-crisis-20230321-p5ctwa

Credit Suisse collapse threatens Switzerland's wealth management crown​

https://www.reuters.com/business/fi...tzerlands-wealth-management-crown-2023-03-22/

Crisis for Switzerland's financial hub as UBS takes over credit Suisse​

https://menafn.com/1105834196/Crisis-for-Switzerlands-financial-hub-as-UBS-takes-over-credit-Suisse

So glad I ended my families relationship with the Swiss financial centre that goes back to early 1950s. The regulators and government have exposed themselves. Oh how times have changed.

 

[JackAlabama]

Switzerland suddenly looks like a ‘banana republic’ in a crisis​

https://www.afr.com/world/europe/sw...a-banana-republic-in-a-crisis-20230321-p5ctwa

Credit Suisse collapse threatens Switzerland's wealth management crown​

https://www.reuters.com/business/fi...tzerlands-wealth-management-crown-2023-03-22/

Crisis for Switzerland's financial hub as UBS takes over credit Suisse​

https://menafn.com/1105834196/Crisis-for-Switzerlands-financial-hub-as-UBS-takes-over-credit-Suisse

So glad I ended my families relationship with the Swiss financial centre that goes back to early 1950s. The regulators and government have exposed themselves. Oh how times have changed.

Well, they have "friendly" govs "helping" them doing that. One of the usual suspects is that big one which occasionally brings democracy to your doorsteps.

The banks there will not be missed. Even all in Bitcoin is a better choice than leaving it there and getting shafted by big fees and "great" investment opportunities.

 

[Martin Everson]

The banks there will not be missed. Even all in Bitcoin is a better choice than leaving it there and getting shafted by big fees and "great" investment opportunities.

Bitcoin would have been a better choice than a CS CoCo bond even dodgecoin would have done better. The Swiss government are jokers. They can change the law overnight like UAE to suit a situation. What happened to shareholder vote even. The countries banking system is similar to a banana republic for real and government actions not far off either...lol .

---- quote start

Switzerland's credibility as a stable, predictable country had been upended by moves like the decision to wipe out the holdings of Credit Suisse bondholders, he said.

Under the takeover deal, holders of Credit Suisse AT1 bonds will get nothing, while shareholders, who usually rank below bondholders in compensation terms, will receive $3.23 billion.

"There are a lot of open questions: the use of emergency law overriding the views of shareholders or the treatment of bond holders," said Stefan Legge, head of tax and trade policy at the University of St. Gallen's IFF Institute for Financial Studies.

"Maybe some people are a bit delusional – and really believe they are doing a great job."

--- quote end


P.S I wonder if the Saudi government will behead the portfolio analyst who caused them lost $1.17bn of the $1.46bn they invested...lol. He got a strong asylum claim anyway if ever he needs to flee the country . Anyway that is drink money to the Saudi's.

 

[JohnnyDoe]

Switzerland = Emmenthal, cows, average industrial chocolate. Anything else left? (Watches are made in China and only partially assembled in CH)

 

[JackAlabama]

Bitcoin would have been a better choice than a CS CoCo bond even dodgecoin would have done better. The Swiss government are jokers. They can change the law overnight like UAE to suit a situation. What happened to shareholder vote even. The countries banking system is similar to a banana republic for real and government actions not far off either...lol .

---- quote start

Switzerland's credibility as a stable, predictable country had been upended by moves like the decision to wipe out the holdings of Credit Suisse bondholders, he said.

Under the takeover deal, holders of Credit Suisse AT1 bonds will get nothing, while shareholders, who usually rank below bondholders in compensation terms, will receive $3.23 billion.

"There are a lot of open questions: the use of emergency law overriding the views of shareholders or the treatment of bond holders," said Stefan Legge, head of tax and trade policy at the University of St. Gallen's IFF Institute for Financial Studies.

"Maybe some people are a bit delusional – and really believe they are doing a great job."

--- quote end


P.S I wonder if the Saudi government will behead the portfolio analyst who caused them lost $1.17bn of the $1.46bn they invested...lol. He got a strong asylum claim anyway if ever he needs to flee the country . Anyway that is drink money to the Saudi's.

Indeed, well every country is going to do that when it suits them. Now we know all are the same.

 

[Forester]

Indeed, well every country is going to do that when it suits them. Now we know all are the same.

Well... yes; but re: CH it is shocking nevertheless.

 

[Martin Everson]

Credit Suisse bondholders prepare lawsuit after contentious $17 billion writedown​

https://www.cnbc.com/2023/03/21/cre...uit-after-at1-bond-writedown-in-ubs-deal.html
----- quote start

Benamou acknowledged that the yield reflected the risk of failure or “non-viability,” but dismissed the suggestion that the write-down was covered by the existing clause.

“In reality, they changed the law on Sunday to allow FINMA to write down the AT1 without any constraint. Of course, there is a degree of flexibility in the prospectuses but if they change the law on Sunday, it’s because they didn’t have enough flexibility to write down the AT1s to zero,” he said.
However Mark Yallop, chair of the U.K.’s Financial Markets Standards Board and the former CEO of UBS U.K., told CNBC that it was plausible that FINMA took a “technical decision” based on its interpretation of the aforementioned write-down clause.

“This is a legal interpretation of that document and I’m sure it will be fought over in court in due course, but I think it’s not right to see this as a political fix-up to suit certain equity holders, necessarily,” he said.

---- quote end

 

[JohnnyDoe]

Only the lawyers will receive money from this action.

 

[Martin Everson]

Swiss regulator defends controversial $17 billion writedown of Credit Suisse bonds​

https://www.msn.com/en-us/money/mar...-writedown-of-credit-suisse-bonds/ar-AA18Ybk6
---- quote start

"This decision upended the usual European hierarchy of restitution in the event of a bank failure under the post-financial crisis Basel III framework, which ordinarily places AT1 bondholders above stock investors. Bondholders are exploring legal action over the contentious writedown."

---- quote end

‘Contracts are made to be honored.’ Billionaire investor David Tepper lashes out against Credit Suisse bond writedown​

---- quote start

“If this is left to stand, how can you trust any debt security issued in Switzerland, or for that matter wider Europe, if governments can just change laws after the fact.”

---- quote end

 

[Martin Everson]

Credit Suisse has violated U.S. tax evasion deal, Senate Committee finds​

https://www.reuters.com/business/fi...s-taxes-us-senate-committee-finds-2023-03-29/
--- quote start

After concluding a two-year investigation into Credit Suisse - which this month agreed to a rescue takeover by rival UBS (UBSG.S) - the committee said it had uncovered "major violations" of the 2014 agreement between the Swiss lender and the U.S. Department of Justice (DoJ) for enabling tax evasion.

New owner UBS or the Swiss government should assume responsibility for any future fines, the committee said, calling on the DoJ and the Internal Revenue Service to investigate whether Credit Suisse should face more penalties.

---- quote end

 

[JackAlabama]

Credit Suisse has violated U.S. tax evasion deal, Senate Committee finds​

https://www.reuters.com/business/fi...s-taxes-us-senate-committee-finds-2023-03-29/
--- quote start

After concluding a two-year investigation into Credit Suisse - which this month agreed to a rescue takeover by rival UBS (UBSG.S) - the committee said it had uncovered "major violations" of the 2014 agreement between the Swiss lender and the U.S. Department of Justice (DoJ) for enabling tax evasion.

New owner UBS or the Swiss government should assume responsibility for any future fines, the committee said, calling on the DoJ and the Internal Revenue Service to investigate whether Credit Suisse should face more penalties.

---- quote end

snap, do they want to ruin the whole of Switzerland or what?
Well would not be a surprise if one looks at where this comes from.

 

[JohnnyDoe]

snap, do they want to ruin the whole of Switzerland or what?

Switzerland has self destroyed itself.

Well would not be a surprise if one looks at where this comes from.

The US cares about its own interests, rightfully so.

Credit Suisse has violated U.S. tax evasion deal, Senate Committee finds​

https://www.reuters.com/business/fi...s-taxes-us-senate-committee-finds-2023-03-29/
--- quote start

After concluding a two-year investigation into Credit Suisse - which this month agreed to a rescue takeover by rival UBS (UBSG.S) - the committee said it had uncovered "major violations" of the 2014 agreement between the Swiss lender and the U.S. Department of Justice (DoJ) for enabling tax evasion.

New owner UBS or the Swiss government should assume responsibility for any future fines, the committee said, calling on the DoJ and the Internal Revenue Service to investigate whether Credit Suisse should face more penalties.

---- quote end

I start having the feeling that you don’t like CS

 

[TheCryptoAnt]

Hey just for yall to know, CS is paying a 17.66% dividend atm so if theres any chance they get bought by another entity/the goverment bails them out...