Credit Suisse - Is it going to go bust, if so what happens?
Discussion
Quite hard watching this play out while the company I work for is owed millions of USD from a contractor in Egypt, but the central bank is blocking USD from leaving the country, they are seemingly unable to just front up cash/support like the Swiss central bank.
We are not too big to fail and are currently at the mercy of our UK bank who are waiting for their million re the loan required to cashflow the project.
So just to be clear the contractor have dollars and want to pay us, they even made an over $1M payment that then just got stuck in the swift/central bank ether and has never made it through, and there is nothing we can do but wait and hope Egypt's situation improves, we are almost certainly gone if the money never comes.
Honest contractor and honest subcontractor, doing honest hard work and the system can't even let normal business transact?
Huge figures being throw about and, the usual no choice, it's not the tax payer paying. it's just liquidity etc etc, but over night meetings by country leaders and central banks shows an high level of urgency here, and you can argue any business that goes bust is just a liquidity issue and that if we can wait longer it'd recover, but they are let go as the consequences aren't far reaching.
What are the consequences of these moves, seemingly none are offered up but in extremis no countries central bank (bar the US maybe) can just do this carte blanche can they, so what is it, citizens of the country involved suffer a bit over time (inflation/currency devaluation?), but there is no significant or immediate impact and so it's not seen, can't be attributed to this specific event, the plebs don't realise what's happening?
We are not too big to fail and are currently at the mercy of our UK bank who are waiting for their million re the loan required to cashflow the project.
So just to be clear the contractor have dollars and want to pay us, they even made an over $1M payment that then just got stuck in the swift/central bank ether and has never made it through, and there is nothing we can do but wait and hope Egypt's situation improves, we are almost certainly gone if the money never comes.
Honest contractor and honest subcontractor, doing honest hard work and the system can't even let normal business transact?
Huge figures being throw about and, the usual no choice, it's not the tax payer paying. it's just liquidity etc etc, but over night meetings by country leaders and central banks shows an high level of urgency here, and you can argue any business that goes bust is just a liquidity issue and that if we can wait longer it'd recover, but they are let go as the consequences aren't far reaching.
What are the consequences of these moves, seemingly none are offered up but in extremis no countries central bank (bar the US maybe) can just do this carte blanche can they, so what is it, citizens of the country involved suffer a bit over time (inflation/currency devaluation?), but there is no significant or immediate impact and so it's not seen, can't be attributed to this specific event, the plebs don't realise what's happening?
Edited by Scootersp on Thursday 16th March 14:35
Adam. said:
isaldiri said:
The SNB hasn't sunk 54b of equity in CS. Technically it's not a bailout but merely a liquidity line from the central bank. There is a difference.
Exactly. CS isn’t bust but it might be if there is a run on the bank and it can’t functional normally. The SNB have stepped in and offered liquidity so CS can fund itself without be charged huge penalties by a sceptical market. All designed to increase confidence.You could argue no one is ever bust, they just have a ongoing liquidity issue for some reason?
The RBS liquidity injection lets call it, is still keeping them liquid isn't it and the government hasn't been able to reclaim the money it put in, so I think after this amount of time we can call it a bail out?
"After further sales in 2022, the UK government’s RBS shareholding reduced below 50% for the first time since 2008, from 51% to 48.1%. This involved 550 million shares in NatWest at an average price of 220.5p per share, realising £1.2 billion."
If the current situation escalates then we could have a bank that just needs a bit more liquidity, not bust or anything no no just possibly needs some more liquidity/money on top of the liquidity/money it had in 2008.
So for CS there absolutely is a risk that the money might become sunk, it certainly can't be used elsewhere whilst it's allocated to supporting CS if required.
Scootersp said:
Quite hard watching this play out while the company I work for is owed millions of USD from a contractor in Egypt, but the central bank is blocking USD from leaving the country, they are seemingly unable to just front up cash/support like the Swiss central bank.
We are not too big to fail and are currently at the mercy of our UK bank who are waiting for their million re the loan required to cashflow the project.
So just to be clear the contractor have dollars and want to pay us, they even made an over $1M payment that then just got stuck in the swift/central bank ether and has never made it through, and there is nothing we can do but wait and hope Egypt's situation improves, we are almost certainly gone if the money never comes.
Honest contractor and honest subcontractor, doing honest hard work and the system can't even let normal business transact?
Huge figures being throw about and, the usual no choice, it's not the tax payer paying. it's just liquidity etc etc, but over night meetings by country leaders and central banks shows an high level of urgency here, and you can argue any business that goes bust is just a liquidity issue and that if we can wait longer it'd recover, but they are let go as the consequences aren't far reaching.
What are the consequences of these moves, seemingly none are offered up but in extremis no countries central bank (bar the US maybe) can just do this carte blanche can they, so what is it, citizens of the country involved suffer a bit over time (inflation/currency devaluation?), but there is no significant or immediate impact and so it's not seen, can't be attributed to this specific event, the plebs don't realise what's happening?
Does the export orders guarantee scheme help with situations like this? Or credit insurance?We are not too big to fail and are currently at the mercy of our UK bank who are waiting for their million re the loan required to cashflow the project.
So just to be clear the contractor have dollars and want to pay us, they even made an over $1M payment that then just got stuck in the swift/central bank ether and has never made it through, and there is nothing we can do but wait and hope Egypt's situation improves, we are almost certainly gone if the money never comes.
Honest contractor and honest subcontractor, doing honest hard work and the system can't even let normal business transact?
Huge figures being throw about and, the usual no choice, it's not the tax payer paying. it's just liquidity etc etc, but over night meetings by country leaders and central banks shows an high level of urgency here, and you can argue any business that goes bust is just a liquidity issue and that if we can wait longer it'd recover, but they are let go as the consequences aren't far reaching.
What are the consequences of these moves, seemingly none are offered up but in extremis no countries central bank (bar the US maybe) can just do this carte blanche can they, so what is it, citizens of the country involved suffer a bit over time (inflation/currency devaluation?), but there is no significant or immediate impact and so it's not seen, can't be attributed to this specific event, the plebs don't realise what's happening?
Edited by Scootersp on Thursday 16th March 14:35
Scootersp said:
The RBS liquidity injection lets call it, is still keeping them liquid isn't it and the government hasn't been able to reclaim the money it put in, so I think after this amount of time we can call it a bail out?.
Bail out is a Daily Mail term, better to be specific.CS and RBS are very different.
For RBS the Government actually injected cash and bought a huge stake in the bank. It has been gradually been selling chunks (at a large loss to the taxpayer) of this off.
CS is in trouble hence SNB stepping in and offering credit lines so CS can function normally in the markets. If confidence returns there is no reason CS will fail. But its an "if" and CS needs to take a lot of remedial action.
CS has 3 main businesses - high street bank, wealth mgt, IB making 4-5bn CHF each. HS made 1.5bn profit, WM lost 600m, IB lost 3.1bn!! Selling or closing IB would solve a lot of their problems.
pquinn said:
People will look at SVB after the fact and spot all the red flags that should have been obvious all along. Just looking at the customers they get involved with and their relationships with them sets off alarms.
Credit Suisse has been a slow motion trainwreck for years.
Credit Suisse has been a slow motion trainwreck for years.
Edited by pquinn on Friday 10th March 11:54
Scootersp said:
Because confidence is all it's about?
You could argue no one is ever bust, they just have a ongoing liquidity issue for some reason?
The RBS liquidity injection lets call it, is still keeping them liquid isn't it and the government hasn't been able to reclaim the money it put in, so I think after this amount of time we can call it a bail out?
"After further sales in 2022, the UK government’s RBS shareholding reduced below 50% for the first time since 2008, from 51% to 48.1%. This involved 550 million shares in NatWest at an average price of 220.5p per share, realising £1.2 billion."
If the current situation escalates then we could have a bank that just needs a bit more liquidity, not bust or anything no no just possibly needs some more liquidity/money on top of the liquidity/money it had in 2008.
So for CS there absolutely is a risk that the money might become sunk, it certainly can't be used elsewhere whilst it's allocated to supporting CS if required.
It's a question of the financial terminology being used and is more a matter of how that liquidity is provided. The RBS liquidity line that the BoE had earlier provided was quite a different thing from the later UK government equity injections into RBS to keep them afloat. You could argue no one is ever bust, they just have a ongoing liquidity issue for some reason?
The RBS liquidity injection lets call it, is still keeping them liquid isn't it and the government hasn't been able to reclaim the money it put in, so I think after this amount of time we can call it a bail out?
"After further sales in 2022, the UK government’s RBS shareholding reduced below 50% for the first time since 2008, from 51% to 48.1%. This involved 550 million shares in NatWest at an average price of 220.5p per share, realising £1.2 billion."
If the current situation escalates then we could have a bank that just needs a bit more liquidity, not bust or anything no no just possibly needs some more liquidity/money on top of the liquidity/money it had in 2008.
So for CS there absolutely is a risk that the money might become sunk, it certainly can't be used elsewhere whilst it's allocated to supporting CS if required.
in 2008, RBS had a rather lousy time in terms of various credit exposures (to put it mildly) which was resulting in very large losses so it wasn't just more liquidity needed but actual shareholder capital. Their balance sheet was going to pot and they couldn't (even with the BoE allowing mortgages and less high grade assets being posted as colleteral to get said liquidity line) survive without the government taking a stake in the bank.
So far, CS are tapping into the former ie a liquidity line where they are getting cash from the Swiss central bank in return for ponying up various things like govt debt and other (in theory) 'high quality assets'. Assuming the regulator has done their job properly (and/or there's no pretty impressive fraud), CS balance sheet is supposed to be solid enough such that it can unlock the required liquidity from the SNB through it's existing assets.
skwdenyer said:
Does the export orders guarantee scheme help with situations like this? Or credit insurance?
UKEF we've been in contact with and they may be an option to defer the loan further with if the bank here get twitchy but they only really back the loan and of course they all charge ongoing interest. The bank are having to wait right now as to shut us down takes away that longer term alternative way of getting their money back. Excuse others if I don't see the commercial and central banks as that different, but the way I see it is the banks in their various forms are shafting us, and the one owed money will take that first before we get anything, when as I say the customer supplier relationship is 100% sound, ridiculous really, system is broken once trade payments are interfered with.
Scootersp said:
Excuse others if I don't see the commercial and central banks as that different, but the way I see it is the banks in their various forms are shafting us, and the one owed money will take that first before we get anything, when as I say the customer supplier relationship is 100% sound, ridiculous really, system is broken once trade payments are interfered with.
There is a fairly significant difference though. I realise for your company it doesn't help but unfortunately the action of the Egyptian central bank to severely restrict foreign currency outflows is part of the risk of having a foreign counterparty as compared to your local UK bank (who as far as that stuck payment is concerned doesn't have you guys at their mercy) being at fault or a wider 'systemic' type of fault in the wider banking world. Obviously one would hope the bank your company is with would either be prepared to extend some further credit or find some kind of invoice discounting line to tap into if they had existing operations in Egypt that would be able to (probably at a discount) get you guys access to that stuck payment by doing some kind of internal cross currency swap.
isaldiri said:
It's a question of the financial terminology being used and is more a matter of how that liquidity is provided. The RBS liquidity line that the BoE had earlier provided was quite a different thing from the later UK government equity injections into RBS to keep them afloat.
I get it's different but the money being provided is at risk yes? No private investor wants to know anymore? So it might just be temporary liquidity support but aren't central banks called the lenders of last resort? last resort gives connotations of last chance? So ok the inference is central bank stepping in safeguards it all, but from what you are saying they will at some point in the future step away with no loss, it will have recovered to be self supporting, or attracted investment/liquidity from elsewhere yes?
How likely is this given the decline through benign/good times, and the now liquidity assistance issue/stigma, how can it hope to recover quicker than it's decline over the last 10-15 years. If the central bank is providing the security/stablility, hows does it walk away from the obligations/commitments its made to do this in any resemblance of a short time frame?
Adam. said:
Bail out is a Daily Mail term, better to be specific.
Bail out is just that, it stems I imagine from bailing out a boat or bailing out a person? Basically you are getting them out of the s
t and in this case by providing money.To name drop the daily mail here is to deflect/belittle, whatever you want to call it money was given/added/spent and not all of it came back.
Scootersp said:
Bail out is just that, it stems I imagine from bailing out a boat or bailing out a person? Basically you are getting them out of the st and in this case by providing money.
To name drop the daily mail here is to deflect/belittle, whatever you want to call it money was given/added/spent and not all of it came back.
why not read the rest of my post, which states why it is too simplisitc a termt and in this case by providing money.To name drop the daily mail here is to deflect/belittle, whatever you want to call it money was given/added/spent and not all of it came back.
Gweeds said:
Incredible to see that rap sheet and yet no exec has seen the inside of a cell.
Again. Every fking time.
Some/most of those not unexpected in the businesses, products and jurisdictions they operate in. They are a big business , peeps take the pee and things go wrong.Again. Every f
king time.Wealth and International Banking likely more troublesome than the investment bank. Losses are part of banking life.
Scootersp said:
I get it's different but the money being provided is at risk yes?
No private investor wants to know anymore? So it might just be temporary liquidity support but aren't central banks called the lenders of last resort? last resort gives connotations of last chance? So ok the inference is central bank stepping in safeguards it all, but from what you are saying they will at some point in the future step away with no loss, it will have recovered to be self supporting, or attracted investment/liquidity from elsewhere yes?
How likely is this given the decline through benign/good times, and the now liquidity assistance issue/stigma, how can it hope to recover quicker than it's decline over the last 10-15 years. If the central bank is providing the security/stablility, hows does it walk away from the obligations/commitments its made to do this in any resemblance of a short time frame?
At risk - yes in both cases it's non zero. However there are very significantly different in degrees of risk between those 2 examples.No private investor wants to know anymore? So it might just be temporary liquidity support but aren't central banks called the lenders of last resort? last resort gives connotations of last chance? So ok the inference is central bank stepping in safeguards it all, but from what you are saying they will at some point in the future step away with no loss, it will have recovered to be self supporting, or attracted investment/liquidity from elsewhere yes?
How likely is this given the decline through benign/good times, and the now liquidity assistance issue/stigma, how can it hope to recover quicker than it's decline over the last 10-15 years. If the central bank is providing the security/stablility, hows does it walk away from the obligations/commitments its made to do this in any resemblance of a short time frame?
RBS - government took an equity stake. no clue whether they would get their money back later. shares can go up as well as down etcetc per the usual investment blurb.
CS - SNB is providing a liquidty line that CS have to post up to 50b worth of 'high quality' securities to access that amount of cash. At this point in time, it's probably going to mean mostly government bonds. the SNB will be as close to certain that they will recover however much cash they are lending to CS through this facility.
the 'lender of last resort' function is the central bank being willing to do the above for CS as compared to how CS would otherwise in a 'normal' market function by borrowing cash from other commercial banks in return for providing those same bonds as collateral because everyone else is worried about similar liquidity issues and doesn't want to have big chunks of cash exposure to CS potentially while the central bank by being able to print it's way out of trouble does not have any liquidity concerns.
isaldiri said:
There is a fairly significant difference though. I realise for your company it doesn't help but unfortunately the action of the Egyptian central bank to severely restrict foreign currency outflows is part of the risk of having a foreign counterparty as compared to your local UK bank (who as far as that stuck payment is concerned doesn't have you guys at their mercy) being at fault or a wider 'systemic' type of fault in the wider banking world.
Obviously one would hope the bank your company is with would either be prepared to extend some further credit or find some kind of invoice discounting line to tap into if they had existing operations in Egypt that would be able to (probably at a discount) get you guys access to that stuck payment by doing some kind of internal cross currency swap.
I appreciate the difference and I'm not banker bashing beyond the fact that as it stands we aren't receiving the very basic fundamental level of service ie easy transacting between two willing and innocent parties! Obviously one would hope the bank your company is with would either be prepared to extend some further credit or find some kind of invoice discounting line to tap into if they had existing operations in Egypt that would be able to (probably at a discount) get you guys access to that stuck payment by doing some kind of internal cross currency swap.
I'm reading about banks being saved despite, to a degree, their own incompetence/risk management, whilst we are potentially going down because of a bank/country's incompetence/risk management! (and the central bank has in turn been supported by the IMF too and still can't see fit to open the taps/do the right thing for us)
The monetary system is definitely not working for us in this instance and you'll excuse me if I don't think it's a completely level playing field! (there is a simmering more resentment based me behind this pragmatic facade, but it serves no purpose to go full on Karen on here)
Our specifics are 2 x 10%'s re two different phases of contract completion part, so the works done ie no leverage remains and a country that's now (not surprisingly) prioritising dollar spend on essentials and work that needs completing over finished works. Some alternative plans are being discussed but it's not easy or without risk if involving third parties.
Adam. said:
why not read the rest of my post, which states why it is too simplisitc a term
Of course i read it but it truely is as simple as, if the money never comes back to the sources that provided it, those sources did bail them out.Time will tell if CS is a RBS or one of the many others that don't end up costing the original supporter.
Zed Ed said:
Some/most of those not unexpected in the businesses, products and jurisdictions they operate in. They are a big business , peeps take the pee and things go wrong.
Wealth and International Banking likely more troublesome than the investment bank. Losses are part of banking life.
"socialism for the rich and rugged individualism for the poor"Wealth and International Banking likely more troublesome than the investment bank. Losses are part of banking life.
Scootersp said:
I'm reading about banks being saved despite, to a degree, their own incompetence/risk management, whilst we are potentially going down because of a bank/country's incompetence/risk management! (and the central bank has in turn been supported by the IMF too and still can't see fit to open the taps/do the right thing for us)
The monetary system is definitely not working for us in this instance
I'm really sorry, it's definitely not working for you. I agree with isaldari, you seem to have been trapped in Egypt's currency controls. There's a reason back in the day that export guarantees were a calculation in crossborder sales. It doesn't help you now of course. Any way you can hold back product/activation keys/support?The monetary system is definitely not working for us in this instance
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