[HN Gopher] UBS got Credit Suisse for almost nothing
___________________________________________________________________
UBS got Credit Suisse for almost nothing
Author : mfiguiere
Score : 133 points
Date : 2023-03-20 18:14 UTC (4 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| notShabu wrote:
| The reason the bank is worth nothing is because it's all
| liabilities (responsibility to provide customer deposits) and no
| profit.
|
| However it's similar to when people fight over the most important
| projects and tickets in a company. They fight over something with
| "negative" value (more work, risky initiatives) because it
| increases how "critical" or important they are to the company
| which can be leveraged into far more value later on.
| [deleted]
| revel wrote:
| There was a question last week about mark-to-mark accounting for
| banks in the wake of the SVB failure. The question was (to
| paraphrase): why aren't banks forced to mark every asset for
| every financial statement. This article pretty comprehensively
| describes why such a thing is not really possible, let alone
| desirable.
|
| In regards to this article, I have to laugh at the asset managers
| holding cocos who thought that they were trading pseudo-warrants.
| I respect the shamelessness of these guys to try and blame other
| people for their own mistakes -- a lot of portfolio managers were
| successfully able to convince investors that their losses during
| the GFC were due to the ratings or govt agencies -- but they're
| not going to convince the central banks to eat the losses on this
| one. There is absolutely no incentive to make Swiss taxpayers eat
| tens of billions of losses because some fund manager didn't read
| the literal name of the instrument he was buying.
| rafaelturk wrote:
| Nohting... Plus all the skeletons in the closet (a.k.a bad debt)
| gbN025tt2Z1E2E4 wrote:
| So the solution to the banking collapse is to create even MORE
| too-big-to-fail monopoly banks? The corruption has gotten so far
| out of control at this point it's laughable.
| xadhominemx wrote:
| Yes, the solution for a distressed bad medium-sized bank is for
| a larger good bank to buy them before they unwind chaotically
| have bring down other banks / the economy. That's been the
| correct/reasonable approach for centuries.
|
| No one is really getting bailed out here: CS shareholders will
| lose ~80% vs what they were worth a couple weeks ago, the AT1
| shareholders got wiped out, and if you look at UBS's share
| price, it's not like people think they got an extraordinary
| gift from the regulators. UBS management at will have to suffer
| an enormous headache to integrate the operations.
| revel wrote:
| Where is the corruption in any of this? That is a strong
| accusation without any semblance of an argument.
|
| During a downturn the stronger companies often acquire
| distressed competitors and consolidate. Evidence of corruption
| would be CS being propped up and executives allowed to pay
| themselves big bonuses. I'm not seeing anything like that, are
| you?
| yieldcrv wrote:
| The protest outside of Credit Suisse in Switzerland is about
| that
|
| Specifically the variety of undemocratic processes to reach
| this result in the past and now. Federal Council overriding
| parliament and the population, specifically to override the
| potential will of shareholders in the company.
| lordnacho wrote:
| The interesting part is the part about the AT1 "bonds". I put
| them in quotation marks because according to the article, they
| are more like a form of subordinate equity. In some ways. Weird
| and fascinating instrument, it's not often I come across a new
| one.
| cm2187 wrote:
| Though the fact that this ia a CoCo is a red herring. I don't
| think it was singled out for bailin because it had a CoCo
| trigger (what Levin goes through at length), I believe it was
| bailed in because it was the most junior, non-common equity,
| instrument on the balance sheet (i.e. rank=junior
| subordinated).
|
| If the swiss authorities needed to do a bigger bailin to
| generate more equity, they could have also written off the next
| instruments in the investor hiearchy which are the T2
| instruments (i.e. rank=subordinated). And if they needed even
| more they could have gone after the bailin bonds (i.e.
| rank=senior unsecured - in theory pari-passu to uninsured
| deposits but issued out of a different legal entity so they can
| be singled-out). None of which have CoCo triggers.
|
| The Fed could do the same with preference shares (rank=junior
| subordinated) issued by US banks that have no CoCo feature (US
| doesn't care about Basel regulations).
| kurthr wrote:
| Yes, they wiped out these CoCo (Contingent Convertable) bonds,
| which are floated to provide money to provide a "capital
| cushion" in the case of stress. As bonds they're definitely
| weird, because (in this case) they are effectively subordinate
| to equity. This wipeout may make it difficult to issue any more
| AT1s, which removes another barrier created in 2008 that was
| supposed to prevent public bailouts. I am a bit surprised they
| didn't just convert an payout at the fairly cheap stock price,
| which it sounds like other regulators are saying they will do?
|
| https://www.investing.com/news/stock-market-news/explainerwh...
| seanhunter wrote:
| The thing that's interesting about cocos is that research has
| established that cocos don't really do what they were
| originally designed for and instead incentivise risk-
| taking[1] by banks and especially so if the conversion terms
| protect existing shareholders too much from dilution.
|
| [1]
| https://www.bankofengland.co.uk/-/media/boe/files/working-
| pa...
| thechao wrote:
| The article actually discusses AT1's at length, and pre-
| addresses all of your arguments. I'm not sure I find Levine's
| argument 100% compelling -- I mean, we're dealing with a
| sentiment based sale, not calculating engines -- but I don't
| think he's as close to wrong as you seem to imply.
| kurthr wrote:
| I don't have a strong opinion, and simply posted one of the
| many articles discussing it today. It's definitely water
| cooler talk, and I wouldn't say it's discussion is really
| 'at length' or base any significant legal or monetary
| decisions on it.
|
| edit: If you have Bloomberg Intelligence there's a nice
| graphic on Additional Tier 1 bonds with Triggers, Loss
| Absorption, and and Write Up by Issurer. It was known that
| both UBS and CS were non-recoverable.
| davidw wrote:
| Is someone going to make a ChatGPT synthesis of Matt Levine's
| writings?
|
| Imagine you have, like, a writer who is really knowledgeable
| about a subject, and you have readers who would like to learn
| about this subject, but also have limited time. And, I mean, the
| writer is really prolific and sometimes feels almost a bit too
| verbose. In these kinds of markets, sometimes there is no deal to
| be struck, and...that's fine? But imagine if there were an
| intermediary who could summarize the writing in a way more
| accessible to people who are casually interested.
| OJFord wrote:
| It was done with GPT3 long before ChatGPT existed (and I'm not
| sure what the interactive format would add here, once
| generated?).
|
| It was pretty good, he quoted (and linked to it, was on Twitter
| iirc) some in a newsletter around the time.
| __derek__ wrote:
| Who needs ChatGPT? MattLevineBot has existed for the better
| part of a decade![1]
|
| [1]: https://twitter.com/mattlevinebot
| lxgr wrote:
| > And, I mean, the writer is really prolific and sometimes
| feels almost a bit too verbose.
|
| I've honestly never felt this way about Matt Levine's
| newsletter. He provides a lot of educational context that news
| articles generally don't, and that to me (other than the
| excellent writing) is its value - if you get rid of that,
| what's left?
|
| And just like in any written medium, you are always free to
| skip sections. How should an LLM make the decision for you
| whether a given section is relevant or even interesting to you?
| davidw wrote:
| I realize it's an unpopular opinion, but something about his
| writing style can feel a bit circuitous at times. This
| particular one was a bit more direct, but sometimes I find
| them a bit of a slog. If they weren't really interesting, I
| simply wouldn't read them. They are, though. That's the
| dilemma.
| mbesto wrote:
| I'm really struggling to understand the gripe here.
|
| > If they weren't really interesting, I simply wouldn't
| read them. They are, though. That's the dilemma.
|
| To provide an analogy: it's almost like you're suggesting
| someone use technology to take a movie and distill it down
| into a 60s TikTok video.
| OJFord wrote:
| I don't agree in this case, but you can absolutely find
| something interesting yet also think it could be better,
| in any number of ways but including if it was denser.
| lxgr wrote:
| It definitely does, but that is exactly the didactic value,
| I'd argue. Examining the same situation through different
| lenses in a somewhat verbose way can make things click in a
| way that a dry and concise statement of facts sometimes
| can't.
|
| I'm not saying that there are no original ideas in his
| writing that could be extracted as bullet points, but on
| average, I think that's not the main reason why people read
| the column:
|
| If you're a finance pro, you probably come for the ideas
| and the clever writing; if you're an interested novice, you
| come for the writing and/or the didactic value. Remove the
| writing and the didactics, and you're probably left with a
| very small audience.
| droopyEyelids wrote:
| Are you confusing the ability to tune a LLM to write in
| someone's style with the ability to have it understand
| everything that person understands?
|
| I might be misunderstanding your comment.
| mbesto wrote:
| Matt Levine's newsletters are valuable for their ability to
| take very complex news, distill them down into simplified terms
| and make them witty and entertaining. TL;DR of his writings
| provide little value here.
|
| > But imagine if there were an intermediary who could summarize
| the writing in a way more accessible to people who are casually
| interested.
|
| https://www.axios.com/
| omgomgomgomg wrote:
| Well, its was worth almost nothing, so there.
|
| There are a couple 1000 people who will be awaiting a salary this
| or next week, it is a bit a financial pandorras box, but with the
| properties of a bottomless pit.
|
| In all seriousness, I know a couple cs folks with rather
| expensive flats and habits, this will not end too good for some
| of them.
| simonswords82 wrote:
| If they were on the inside did they not see this coming? I was
| reading about the incoming demise of CS about 3-4 months ago on
| WallStreetBets subreddit...
| CatWChainsaw wrote:
| Earlier this week I started reading both The Panama Papers and
| _Moneyland_. The hope is that they 'll help make sense of such
| insensible things.
| indigodaddy wrote:
| So many good sentences and one-liners just in the first paragraph
| of this article.
| loeg wrote:
| Levine is a national treasure. Sign up for the newsletter! He's
| a phenomenal writer and they are consistently great.
| morninglight wrote:
| That's what my mother in law said about our baby. HA!
| bitL wrote:
| Nothing? More like overleveraged $1T that can explode anytime?
| UBS should have been paid instead to take the CS corpse.
| chaosbolt wrote:
| 1T$ will never explode and drag it down, it's "QE saved by the
| state" kind of money, so if UBS is overleveraged, it makes
| sense to buy Credit Suisse, this way if it all goes to shit
| they'll blame it on CS and if it doesn't then they got a bank
| for cheap.
| bitL wrote:
| OK, if the part of the acquisition agreement with government
| is "QE if needed", then it makes sense to acquire CS to
| continue kicking the can forward.
| chaosbolt wrote:
| >agreement
|
| There is no agreement in my opinion and there never is on
| QE, but what choice does any government have between "1
| Trillion loss that can trigger more loss and potentially
| cause a revolution, a famine, a war, etc..." and "kick it
| down like those before me did and those after me will do",
| the can has already been kicked enough times, might as well
| continue until some genius comes up with a new financial
| system adapted to the 21st century.
|
| People always expect solutions, sometimes there aren't any
| that are satisfactory.
|
| The people who added so little value to the market and got
| so much out of it pulled that money from somewhere, someone
| built those houses etc... sure war and conquest has helped
| modern empires like the US, but it can only get you so far
| before you start risking nuclear armageddon, plus it's
| really, really, really, evil, kids getting bombed for oil
| is evil no matter how you put it... the alternative is well
| crafter financial systems that borrom from the future to
| spend today, aka QE, your grandkids will pay those
| interests on that loan the fed printed and lent the
| treasury, but you will have a more comfortable life.
| pc_edwin wrote:
| I find this stage of the economic/business cycle to be truly
| fascinating. A lot of things happen in such a short amount of
| time that we typically only read about or see in movies
|
| UBS's main calculus is risk, which is why the offer can double in
| a matter of hours. If the crisis is not stabilised, UBS could
| potentially be liable for tens of billions and face potential
| downfall.
|
| This is why UBS needed a guarantee from the Swiss National Bank
| and a MAC clause to proceed with the deal.
| mojuba wrote:
| https://archive.is/lddBY
| jacquesm wrote:
| Interesting reading. The bit that _really_ jumped out at me was
| this: "Saudi National Bank -- the Swiss bank's largest
| shareholder" -> so here we have part of the problem, with all of
| these banks owning all or some of each other it is no wonder that
| when one of them gets into trouble the others are immediately
| discounted on the stock market. Not only do they get indirectly
| affected because they likely engage in similar practices, they
| also are interlinked through various stock holdings. And the
| solution here? More such linkage! Why didn't the Swiss government
| or the Swiss national bank end up owning it? Instead it is now -
| again - part of another such complex.
|
| You have to wonder how long it will be before UBS will have to be
| rescued.
|
| Another random thought: If even the Swiss can't keep it together
| financially we're in real trouble.
| twblalock wrote:
| > If even the Swiss can't keep it together financially we're in
| real trouble.
|
| The Swiss banking industry has been overrated for a long time.
|
| In this case it's not like a competent, sensibly run bank
| failed. Credit Suisse had a track record of being pretty
| terrible.
| TheOtherHobbes wrote:
| Not just pretty terrible, but criminal and corrupt pretty
| terrible.
|
| https://www.firstpost.com/explainers/from-cocaine-money-
| laun...
| actionablefiber wrote:
| "Crime doesn't pay" - Credit Suisse, probably
| JumpCrisscross wrote:
| > _Why didn 't the Swiss government or the Swiss national bank
| end up owning it?_
|
| The Swiss don't want to own half a trillion francs of
| specialised liabilities. There is zero precedent for a
| nationalised investment bank of all things.
| umeshunni wrote:
| > There is zero precedent for a nationalised investment bank
| of all things.
|
| Aren't large state holding companies and sovereign wealth
| funds (Norway, Singapore, ME/Gulf countries) a special case
| of national investment banks?
| VLM wrote:
| That's another common Matt Levine (the article author) theme
| that very large index funds are a weird form of insider
| trading.
|
| I subscribe to his email mailing list which is literally his
| articles from the website without the infinite ads and
| requirement for registration and subscription.
| crazygringo wrote:
| Is there a good article of his to start with on that?
|
| I've never heard of that theme and I'm intrigued.
| tedunangst wrote:
| https://ritholtz.com/2020/07/should-index-funds-be-
| illegal-2...
| HDThoreaun wrote:
| Can't find it because he has so many articles but there was
| one that talks about how ESG makes sense from an index fund
| owning oil point of view because it's an excuse for the
| fund managers to basically coordinate collusion among the
| oil companies. If they all have the same shareholders then
| those shareholders can tell of them to produce less oil and
| the price will increase. The usual concern of defecting is
| taken care of because of the collusion. If one of the
| companies doesn't produce less the fund managers can vote
| them out for not being "ESG" enough.
| Silverback_VII wrote:
| >Another random thought: If even the Swiss can't keep it
| together financially we're in real trouble.
|
| The Swiss government(and the SNB) could have easily saved
| Credit Suisse, but the politicians lacked the backbone to do
| so. They panicked at the first sign of trouble. Saving the bank
| was important for Switzerland's image in the financial world,
| but it seems that they no longer care about their own country.
|
| By letting a 167-year-old bank fail instead of simply buying it
| for 16 billion, they lost a lot of trust.
| 988747 wrote:
| [dead]
| kwere wrote:
| CS is a branding liability, the trust in the name is abysmal,
| as withdrawals shows
| qwytw wrote:
| Well they could just bought the brand name then? The rest of
| the balance sheet doesen't seem to be worth that much when
| you balance everything and the executives were clearly a huge
| net negative...
| rossdavidh wrote:
| I'm no expert in the field, but my understanding is that CS
| was, in fact, rather too big for the nation of Switzerland to
| bail out. Their two biggest banks (CS and UBS) do an awful lot
| of non-Swiss business, so that is possible for them in a way
| that it would not be for a nation like the U.S.A. So, they made
| UBS take it (all accounts are that UBS was not interested until
| the Swiss government told them that yes they were interested).
|
| Also, UBS has more skill at running a bank than the Swiss
| government, although arguably the Swiss government might have
| had more skill at running a bank than Credit Suisse.
| cm2187 wrote:
| "all these banks owning each others": Which other banks? This
| is fairly unusual as the capital treatment of equity ownership
| is very punitive. Banks shareholders typically aren't banks.
| jacquesm wrote:
| That quote isn't what I wrote. And the relevant bank is
| mentioned just prior to the bit you quoted. And now they have
| a new shareholder: UBS. Which is also a bank.
| pulse7 wrote:
| > Why didn't the Swiss government or the Swiss national bank
| end up owning it?
|
| This was the plan B which would happen if UBS would reject the
| deal.
| paganel wrote:
| > If even the Swiss can't keep it together financially we're in
| real trouble.
|
| Eventually all financialized systems go the way of the dodo
| bird.
|
| The Republic of Genoa is the classic example for this, as they
| had made their fortunes via trade (including slave trade)
| starting with the 1200s, but by the 1500s almost all of their
| wealth-creation had started to rely on providing "financial"
| services. And then they crashed. I'm also of the opinion that
| the UK's problems are caused by the same phenomenon, that's why
| they have never quite recovered from the 2008-2010 global
| financial crisis.
|
| Afaik Switzerland is not yet a fully financialized economic
| system but it's certainly up there. The future will be
| interesting for them.
| karmakurtisaani wrote:
| Finance and investing is largely based on trust in the
| future. I wonder if a long enough period of stability makes
| us too comfortable with taking risk and bad investments, only
| to expose us to massive downside far enough down the line.
| Then the inevitable black swan event happens, and
| finance/investment based wealth gets wiped out.
|
| It doesn't help that the mind set a successful trader or
| banker needs is how to maximize their own net worth - not how
| to build a long term stable and profitable business.
| TheOtherHobbes wrote:
| "Finance and investing" are basically just gambling. You
| might as well bet on horses, dogs, cards, or crypto.
|
| Money is neither a thing nor a limited resource. Money is a
| political tool certain groups use to ration power and
| accountability. It _used_ to be based on scarce objects,
| but now it 's pure abstraction.
|
| An important part of that is making sure insiders have
| special opportunities and backstops most of us don't. For
| the real insiders it's a rigged house. And for the most
| inside of the insiders it's impossible to lose more than
| token amounts.
|
| You can be sure that whatever happens to banking, there
| will be people whose gambles will somehow miraculously be
| made whole while the rest of us are told "Oh dear, suddenly
| there is no money. Again."
| sschueller wrote:
| The Swiss are extremely pissed. They spent a lot of capital and
| time to put up the to big to fail laws which this bank met yet it
| still failed.
|
| CS paid over 32 Billion in bonuses since 2013![1] Meanwhile
| people aren't getting paid more to balance the inflation.
|
| I also see a lot of US blaming going around specifically because
| of the capital regulations that the EU and Switzerland put in
| place since 2008 and supposedly the US did not. Also supposedly
| profited over them because they did not need to meet as strict of
| capital requirements. I don't hear much about SVB however.
|
| The news has also reported that the Swiss government wanted to
| let the US branch of CS fail but there was enormous pressure from
| the US to prevent this.
|
| There are a lot of details of this deal that aren't clear yet but
| I do have the feeling everyone here more or less agrees this was
| the only option. The focus seems to be on why it came to this
| situation in the first place. There is also a push from some
| parties for a government investigation.
|
| I also expect the next pension law adjustment coming up to have a
| very hard time after all this.
|
| [1] https://www.blick.ch/politik/trotz-hilfe-vom-staat-darum-
| sol...
|
| Edit: Spelling
| [deleted]
| gruez wrote:
| >CS paid over 32 Billion in bonuses since 2013![1] Meanwhile
| people aren't getting paid more to balance the inflation.
|
| It's worth noting that in certain industries, bonuses make up a
| fair chunk of total comp and are _expected_. They should
| therefore be thought of as being closer to employee
| compensation than some sort of extraordinary reward.
| rcme wrote:
| Yes, but in banking, government bailouts have also come to be
| expected. Clearly the public should consider bailouts and fat
| profits and bonuses as fundamentally incompatible.
| gruez wrote:
| >bailouts and fat profits and bonuses as fundamentally
| incompatible.
|
| I noticed you specifically called out "bonuses" but not
| salaries or wages, implying that bonuses are bad but
| salaries and wages are not. However, as I pointed out, the
| bonuses should effectively be counted as wages because
| they're expected.
| rcme wrote:
| I also said fat profits, which generally encompasses all
| business activity.
| JumpCrisscross wrote:
| > _spent a lot of capital and time to put up the to big to fail
| laws which this bank met yet it still failed_
|
| At a marginal CHF 9 billion contingent senior taxpayer expense.
| Not great. But being able to tank $17bn of AT1s was $17bn UBS
| won't have to raise and Bern won't have to finance.
| 0xDEF wrote:
| >I also see a lot of US blaming going around
|
| Social media has spread East German boomer anti-Americanism to
| the rest of the German-speaking world.
|
| Today countries like Austria, Switzerland and Germany are full
| of people who will blame bad weather on the US.
| TeMPOraL wrote:
| > _Today countries like Austria, Switzerland and Germany are
| full of people who will blame bad weather on the US._
|
| Obviously, if anyone has a weather control system today, it's
| the US - specifically, either the CIA or the DOD. I mean,
| this is what the TV has been telling us for the past 50+
| years.
|
| This is the flip side of Hollywood being the cultural
| propaganda arm of the USA. You have to take the good with the
| bad!
| throwway120385 wrote:
| You should see our mind control system.
| roundandround wrote:
| Of course to show them to you we would have to shut them
| off.
| Silverback_VII wrote:
| The Germans are losing their industry because someone blew up
| a pipeline. who knows, maybe it has something to do with
| that?
| hsjqllzlfkf wrote:
| I'm an European person and generally mildly suspicious of
| American govs intentions. Nevertheless, in this case I do
| hope they blew up the pipeline, because Germany lack of
| action towards Russia's invasion of Ukraine is an absolute
| stain for Europe.
| B1FF_PSUVM wrote:
| Worse than that, they were roping in Russia - more
| successfully than in the past eight centuries - and those
| economic ties were blown worse than the pipeline.
| dralley wrote:
| Those economic ties were broken the moment Russia started
| threatening to cut off the gas unless Germany did what
| they wanted, which took about 3 days and escalated over
| the next several months. It has been transparently clear
| for a decade that Germany was the one being "roped" by
| Russia, not the one "roping" Russia.
| Swenrekcah wrote:
| Putin has been invading his neighbours since 2008 and
| finally launched a full scale war.
|
| How would you say that is "roping in Russia"?
| dralley wrote:
| The Germans made a series of bad decisions despite being
| warned for years by not just the US, but also half their
| neighbors, and basic common sense.
|
| At the point the pipeline was blown up, Russia had already
| essentially cut off the flow with their "oh dear, the
| turbine seems to be malfunctioning" antics.
| cronix wrote:
| US: Hey Germany, you shouldn't be so reliant on Russian
| NG/Oil (buy ours instead)
|
| Germany: We're ok, thank you for your concern
|
| Russia: cuts back NG/Oil going through pipelines to
| Germany
|
| US: Let's just make that permanent. Germany doesn't know
| what's good for itself. Boom. Hey Germany, now that you
| can't get it from Russia, would you like to buy some of
| ours? We've been telling you, ahem, warning you, for
| years, friend.
| vkou wrote:
| That's conspiracist talk, pipelines blow up by themselves
| all the time.
|
| There is no plausible way that the party that's both eager
| to export LNG, and has a geopolitical interest in seeing
| Germany distance itself from Russia (without getting cold
| feet when the winter starts, and everyone actually gets
| cold feet) had anything to do with it.
| cpursley wrote:
| When the US says jump, Germany asks: how high?
| realworldperson wrote:
| [dead]
| Silverback_VII wrote:
| >I do have the feeling everyone here more or less agrees this
| was the only option.
|
| It was certainly not the only option. The Swiss seem to bury
| everything that was once important to them. They are not truly
| neutral anymore, and now they have let one of their oldest
| banks fail. The image of Switzerland as being a place of
| stability and smart decisions takes a big hit.
| thrown123098 wrote:
| [flagged]
| QuercusMax wrote:
| I bet you think SVB failed because they were too "woke" as
| well, right?
| formerly_proven wrote:
| The comment is sarcastically referencing GPs "the Swiss
| seem to bury everything that was once important to them".
| thrown123098 wrote:
| The worst thing about the new left is how lame they made
| being left. 30 years ago we would have had illegal raves
| during the lockdowns. Today we had illegal church
| services.
|
| What the tuck is wrong with these people?
| belter wrote:
| Swiss press of today, mentions Credit Suisse are still planning
| to pay their Bankers Bonus before the deal concludes...
| curiousllama wrote:
| > suppository profited
|
| I think you mean supposedly
| aussiegreenie wrote:
| No, I think he/she meant Swiss Taxpayers have had things
| shoved up their bottom.
| tannhaeuser wrote:
| I think you mean showed up in their bottom?
| MichaelZuo wrote:
| I'm surprised Matt Levine would write a somewhat clickbaity
| title.
|
| If the net equity value of Credit Suisse was very low or perhaps
| even negative, depending on the accounting, then UBS in fact paid
| quite a high price because of all the liabilities.
| kgwgk wrote:
| "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 wrote:
| Is there some additional meaning you want to convey by
| reposting this quote?
| mey wrote:
| Considering Credit Suisse's litigation history, (
| https://en.wikipedia.org/wiki/Credit_Suisse#Controversies ), I
| would be surprised if their liabilities are limited to just the
| balance sheet.
| _nalply wrote:
| And that's why UBS not only paid not a lot but also got a
| guarantee from the Swiss National Bank for about, I don't
| know, perhaps 100 billion Swiss francs.
| eloff wrote:
| It was 9 billion. UBS is on the hook for the first five
| billion in losses, the Swiss National Bank for the next
| nine, and UBS anything else above that.
| OJFord wrote:
| Is that a common structure? Seems a bit odd to me to want
| a backer for the middle bit, but I suppose be so
| confident that it won't be worse than that that you're
| happy with the tail?
| ot wrote:
| Yes, every insurance works like that: deductible, then
| coverage, then you're on the hook again.
| OJFord wrote:
| True! Good point. Assuming it's the same in this kind of
| deal as insurance I'm familiar with then, it's just..
| yeah, ideally you wouldn't, but you can't get (well, I
| suppose there's a price..?) someone to take _all_ your
| risk, so you just beat it down to some acceptable level
| that you can 't imagine needing more than.
| weinzierl wrote:
| Negative, and likely with a non-negligible value. From what I
| understand the acquisition came with considerable state
| guarantees given to UBS for Credit Swisses liabilities. To a
| degree that I have heard it called a disguised bailout.
| bryanlarsen wrote:
| I doubt he did write the title, aren't editors usually
| responsible for titles. Which is unfortunate because the
| article's title is Betteridge's law without a question mark.
|
| Credit Suisse has a half trillion in deposits (aka
| liabilities), so UBS paid a half trillion dollars for Credit
| Suisse, minus the hard to value assets of Credit Suisse.
| OJFord wrote:
| Recent titles include:
|
| - _Credit Suisse Puts On a Brave Face_
|
| - _Silicon Valley Bank Is For Sale_
|
| - _Crypto Bank Had a Boring Collapse_
|
| - _Goldman Wants to Be More Boring_
|
| - _AMC Apes Hate AMC 's APEs_
|
| ... He writes them.
|
| (And How I Wish He'd Drop The BuzzFeed-Style Casing)
| loeg wrote:
| > And How I Wish He'd Drop The BuzzFeed-Style Casing
|
| Isn't it just conventional Title Case? Or are you objecting
| to capitalizing some particular words?
| OJFord wrote:
| It may be more conventional in the US. But yes,
| _especially_ on words like 'be', & 'its' makes it read
| very 'Oh My God You Will Not Believe These 6 Reasons ...'
| to me.
| telotortium wrote:
| Nope, both of those are usually capitalized in title
| case. Only articles and prepositions are lowercased.
| OJFord wrote:
| Like I said, this may be conventional _in the US_.
|
| https://www.bbc.co.uk/
|
| https://www.thetimes.co.uk/
|
| https://www.theguardian.com/
| tedunangst wrote:
| Be is a verb. It is capitalized in titles.
| OJFord wrote:
| Like I said, this may be conventional _in the US_.
|
| https://www.bbc.co.uk/
|
| https://www.thetimes.co.uk/
|
| https://www.theguardian.com/
| loeg wrote:
| He writes his own titles; Money Stuff is a newsletter he
| enjoys substantial editorial control over. It's not an
| ordinary article or op ed at a news outlet.
| riffraff wrote:
| I'm pretty sure he writes his own titles in this case, this
| is a very personal column/newsletter, the titles are often
| references to previous things he mentioned and so on, a
| random title editor would not be up to par.
| [deleted]
| indigodaddy wrote:
| He explains that $3B is almost nothing in the context of the
| deal and situation. It makes sense as you read the article.
| cm2187 wrote:
| On paper, UBS gets 35bn of CET1 + 16bn from the AT1 write off,
| for 3bn.
|
| You would have to believe the assets are massively mismarked
| for this to be off. I am not aware that it is the claim made
| against CS. The claim against CS I understand is not being able
| to turn a profit and large mishaps. Not the same thing as a bad
| book.
___________________________________________________________________
(page generated 2023-03-20 23:01 UTC)