[DigitalOne]

Credit Suisse Shares Plunge 30%

Credit Suisse shares nosedived to historic lows Wednesday after its main shareholder said it would not invest any more money, as market jitters over European lenders spiralled in on the Swiss bank.

Switzerland's second-biggest bank, hit by a series of scandals in recent years, saw its share price tumble off a cliff after Saudi National Bank chairman Ammar Al Khudairy said it would "absolutely not" up its stake.

Source

Till quite recently, they were giving gyaan on why they wouldn't buy bonds of a beleaguered Indian conglomerate.

[vamsi.kona]

Originally Posted by DigitalOne

Credit Suisse Shares Plunge 30%

Till quite recently, they were giving gyaan on why they wouldn't buy bonds of a beleaguered Indian conglomerate.

I don't think Credit Suisse shares falling by 30%, while a fact, correctly showcases the overall scenario. Along with that, one should also mention that this bank, which was and is still considered as one of the top banks globally, has been on a decline since 2007. I don't know how such a big institution continued with such poor stock performance for almost 15 years.

[carboy]

Originally Posted by DigitalOne

Till quite recently, they were giving gyaan on why they wouldn't buy bonds of a beleaguered Indian conglomerate.

Their stock is plunging from last 1 year or more . Their stock was priced at 2.70 CHF even on 1st Dec 2022. Their stock falling isn't new & was also pretty well known even when they stopped margin loans on Adani Bonds.

[alpha1]

Originally Posted by DigitalOne

Credit Suisse Shares Plunge 30%

Till quite recently, they were giving gyaan on why they wouldn't buy bonds of a beleaguered Indian conglomerate.

"Pot calling the kettle black" ?
If so, then all the more reason to distrust Adani.

Originally Posted by vamsi.kona

I don't think Credit Suisse shares falling by 30%, while a fact, correctly showcases the overall scenario. Along with that, one should also mention that this bank, which was and is still considered as one of the top banks globally, has been on a decline since 2007. I don't know how such a big institution continued with such poor stock performance for almost 15 years.

The funny thing I recollect ... one of my close friends joined CS Pune around that period - I guess 2010. And every year I heard same interesting stories:
1) increments and bonus at "working levels" was very low since the company is making losses
2) existing people are let go easily without any retention tactics
3) new people are hired at significant hikes compared to the earlier person who left
4) "management level" was getting consistently higher payout year after year

I used to be amused that how could a company be in dire conditions year after year (and still continue with same management cadre folks at >50 lakhs package)

[pandey.jai]

Originally Posted by DigitalOne

Credit Suisse Shares Plunge 30%

UBS rumored to be (forced into) buying CS. The offer is rumored to be 0.25 francs where the CS stock ended Friday at 1.85 francs. UBS will essentially end up holding the bad debt.

Swiss authorities in trying to bailout CS might just mess up both UBS and CS. Hopefully this is where it all ends and the contagion doesn’t spread.

[Zinger_Winger]

Originally Posted by pandey.jai

UBS rumored to be (forced into) buying CS. The offer is rumored to be 0.25 francs where the CS stock ended Friday at 1.85 francs. UBS will essentially end up holding the bad debt.

Swiss authorities in trying to bailout CS might just mess up both UBS and CS. Hopefully this is where it all ends and the contagion doesn’t spread.

The contagion effect is inevitable. UBS being forced to take over CS's rotten derivative exposures is honestly much more than UBS can chew on.
A few more rate hikes would bring all the rot out in the open.
With UBS now being forced in, it's going to be a 10,000 mega-tone fallout, compared to a 100 mega-tone impact that only CS going down would've had globally.
Sadly, seems like it's all being deliberately orchestrated to create a systemic degradation of the banking system and usher in the cash-less, CBDC era. In hind-sight, looks like the crypto 'preppers' were correct, all along. Praying it doesn't come to that.

[varunswnt]

Reuters - UBS salvages most value from Credit Suisse wreck

The Swiss government, central bank and regulator FINMA concluded that a UBS takeover was better than letting Credit Suisse fail, which could have sparked a wider banking-sector panic. The job for Kelleher was how to avoid infecting UBS with its arch-rival’s problems.

He’s secured some handy protections. The all-share offer values Credit Suisse at 60% less than its closing share price on Friday, and at a fraction of its 45 billion Swiss franc book value at the end of last year. FINMA will also let UBS write off its target’s debt instruments, known as Additional Tier 1 (AT1) securities, boosting the combined group’s equity capital by about 16 billion Swiss francs. Meanwhile the government will cover up to 9 billion Swiss francs of losses, such as markdowns on Credit Suisse assets, past a certain threshold.

Thanks to a competition waiver, Kelleher can even keep Credit Suisse’s domestic unit, giving UBS a dominant position in local retail and corporate banking and allowing it to extract hefty cost savings. Chief Executive Ralph Hamers reckons the bank can cut about $8 billion of annual expenses by 2027. After deducting tax at 24% and capitalising using a 10% discount rate, those savings have a net present value of about $60 billion - roughly in line with UBS’s market value before the deal.

All this sounds rosy from UBS's perspective, but only time will tell how this pans out. It is now too much of UBS concern rather than Swiss authorities (putting all their eggs in single basket), even putting more risk and concentrating on only 1 stakeholder. With this, I believe Swiss banking will definitely take a long term hit with investors confidence. So much for the famed Swiss banking. It is also sad to see one more esteemed institution (150+ years old) come to such an abrupt end.

[SnS_12]

Credit Suisse had some real shit on their balance sheet that even Swiss government couldn’t digest for them to force UBS to buy CS at a 60% discount as CS was valued at $ 8 bln on Friday and was sold to UBS for a little over $ 2 bln and the shareholders at CS had no voting rights as well to stop the deal because of emergency laws bought in over the weekend by the government which just pushed them into a tighter corner.

And all this happened between the top two largest banks in Switzerland over the weekend. The banking sector is in a different low when it comes to confidence by depositors and investors alike.



https://www.cnbc.com/2023/03/20/ubs-...it-suisse.html

[varunswnt]

Originally Posted by varunswnt

It is now too much of UBS concern rather than Swiss authorities (putting all their eggs in single basket), even putting more risk and concentrating on only 1 stakeholder. With this, I believe Swiss banking will definitely take a long term hit with investors confidence.

Some more updates from Swiss folks who are not directly part of banking domain.

Reuters - Switzerland wakes to new era after historic bank merger; employees 'shocked'

The Swiss Bank Employees Association, in a statement to Reuters, demanded that UBS keep job cuts to an "absolute minimum".

"The jobs of very many employees are at stake," it said, adding that it was in touch with management.

The statement underscores the sense of unease in Switzerland, with its reputation as a global financial center on the line.

Green Party lawmaker Gerhard Andrey said that Credit Suisse is "such a visible institute".

"This puts us in a very difficult situation as a country," he said.

Some expressed concerns about the dominant position of UBS.

Swiss media was also shocked by the developments.

"A zombie is gone but a monster is born," read the title of a commentary in the Neue Zuercher Zeitung, often seen as the voice of the establishment.

"A few months ago, nobody would have thought that Credit Suisse would fail. However it is not an accident," the newspaper wrote in the piece accusing the bank of arrogance and pride.

The Tages-Anzeiger newspaper described the affair as a "historic scandal".

"The federal government, the financial supervisory authority and the national bank let themselves be ripped off by UBS," the paper wrote.

"The new mega bank has the advantages - taxpayers, customers, and employees have the disadvantages," the paper added in an editorial, warning of brutal job cuts ahead.

[Turbanator]

This article has some details about what happens to whom.

https://www.ndtv.com/world-news/the-...dtv_topstories

I don't know why these guys announced so much in public. They could have held talks privately for a higher control or maybe their talks failed but they will be the biggest losers in addition to other shares and bondholders.

From the same article.

Gulf investors old and new are hurting. Saudi National Bank's investment was stunning in its brevity: the lender lost 1.1 billion francs less than 15 weeks from when it finished buying its stake in Credit Suisse's latest capital raise. The firm thought it was buying at a bargain when it became the Swiss bank's largest shareholder just a few months ago. Saudi National Bank's chairman helped fuel the panic this week when he ruled out raising its stake in Credit Suisse.

[SnS_12]

Originally Posted by Turbanator

I don't know why these guys announced so much in public. They could have held talks privately for a higher control or maybe their talks failed but they will be the biggest losers in addition to other shares and bondholders.

The amount invested by Saudi Bank to raise capital in CS is just 2.2% of their investment portfolio and at that point they thought its an financial opportunistic investment and the share values were at the floor price. Plus, loosing a few billions will not really hurt them financially as they were clear before CS went under that they won't raise their stake more than 9.9% and even after UBS bought them they will still maintain it as they don't think CS will need any additional capital.

But, who knows the Saudi's along with Chinese could have had an alternate plan and actually benefitted from CS's downfall, which we are not aware off yet.

[Aditya]

Credit Suisse collapses | UBS acquires it - Posts moved to a new thread.

[SnS_12]

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.

The western government’s are spending good money behind bad and all it will help them do is kick the can further down the road and no real solution for the mess the banking sector has gotten into.

https://www.bqprime.com/amp/global-e...em-13-500-each

[SnS_12]

US Treasury Secretary Janet Yellen clearly said that if a citizen or company has a deposit of more than $250k in smaller bank or community banks and credit unions, which is not insured by FDIC and their failure won’t lead to systemic risks or economical financial consequences then the government or the Fed along with the treasury won’t save them. But, if the same money is parked with the big banks. (SVB, Signature, First Republic) then its a different story. So, they are just telling the depositors with more than $250k in these banks to initiate a bank run on these banks if they want to secure their money

https://youtu.be/Bcvl104tyRY

[SnS_12]

The chairman of top Credit Suisse (CSGN.S) shareholder Saudi National Bank (SNB) (1180.SE) has stepped down less than two weeks after making comments blamed for contributing to the Swiss lender's demise.

https://www.reuters.com/world/middle...an-2023-03-27/