Credit Suisse - Is it going to go bust, if so what happens?

[Newc]

[vulture1]

Quick flick onto bloomberg and it seems they have got the day squad up to do a show... pretty big story

[nickfrog]

darreni said:

What does this mean for us normal folk in relation to uk banking/ stock markets etc.

We might have a better idea tomorrow when the markets open.

[Carl_Manchester]

the eye of Sauron will surely turn to Unicredit eventually but that could be tomorrow or in another 15 years.

[DeejRC]

I’m amused at some of the responses on here about this.
Rather than 2008, this actually feels far more like 2011/12 and “peg” time.
The SNB don’t fk about when it comes to finance/money. The “rules” or whatever that ppl think exist in international finance simply don’t in CH. If the SNB decides action is necessary, then that action is taken - regardless of anybody else, regardless of any laws, any standards, etc.
As to why they can do this…with seeming impunity…again the answer is simple - they are the biggest boy on the block. The Fed has been trying to break the SNB or bring it heel for years. It’s not so much terrified of them, but loathes them. They thought they had them with the forcing of disclosing American accounts in 2012/13 but the Swiss just told every single one of their Yank account holders to ps off. Anyone with a mortgage or loan had to pay it back toute suite.
The Fed are powerful, the rest of the world though banks in CH.

[isaldiri]

DeejRC said:

I’m amused at some of the responses on here about this.
Rather than 2008, this actually feels far more like 2011/12 and “peg” time.

The comparison with 08 is probably a little more relevant given the sudden concern gripping financial markets whether there is a wider systemic banking issue. The SNB doing whatever they want re the eur/chf peg in 2011 and in this case waving away rules to enable the ubs/cs merger (which they have been trying to engineer for a while) is somewhat of a sideshow....

[Gweeds]

UBS down 9% on opening, and CS down 60% - I assume the CS shareholders will be taking this haircut?

[Whoozit]

isaldiri said:

DeejRC said:

I’m amused at some of the responses on here about this.
Rather than 2008, this actually feels far more like 2011/12 and “peg” time.

The comparison with 08 is probably a little more relevant given the sudden concern gripping financial markets whether there is a wider systemic banking issue. The SNB doing whatever they want re the eur/chf peg in 2011 and in this case waving away rules to enable the ubs/cs merger (which they have been trying to engineer for a while) is somewhat of a sideshow....

Agree with isaldiri. In October 2008 there was such a widespread lack of trust between banks, I was told by people who knew that we were 24 hours away from zero liquidity globally. Cashpoints would have stopped working. I marched over to my bank and transferred everything above the deposit guarantee to pay off an overseas mortgage, taking a horrendous spread on the FX in the process. I reasoned I'd rather have an asset I can live in if push comes to shove, than see all my cash vanish.

[Gecko1978]

So the big central banks around the world are going to increase the flownof USD...sounds like QE which causes inflation which lead to irate rises which makes people poorer....you could not make this stuff up literally governments causing the pain we are seeing they claim they are trying to avoid

[86]

Seems regulators asleep at the wheel again across the world. Don’t see CS as the end of it. Indeed will be interesting to see how UBS digested this a lot of pain and sell off to come ?

[Tlandcruiser]

Would it not be less painful in the long run to let the bank collapse

[Tango13]

Tlandcruiser said:

Would it not be less painful in the long run to let the bank collapse

My knowledge of banking extends to watching 'Margin Call' and 'The Big Short' but I have thought that letting one bank fail would serve as a useful wake-up call to everyone else, a reminder that actions can have some serious consequences.

[SWoll]

Tlandcruiser said:

Would it not be less painful in the long run to let the bank collapse

It's a confidence thing I expect. Allow something as big as CS to collapse and it's a house of cards?

[isaldiri]

Tango13 said:

My knowledge of banking extends to watching 'Margin Call' and 'The Big Short' but I have thought that letting one bank fail would serve as a useful wake-up call to everyone else, a reminder that actions can have some serious consequences.

The concept of 'moral hazard' has been one that has dogged central bankers for quite a while but probably isn't a conundrum that can actually be solved. One could argue the above was tried with Lehman with quite serious consequences........

[Digga]

isaldiri said:

Tango13 said:

My knowledge of banking extends to watching 'Margin Call' and 'The Big Short' but I have thought that letting one bank fail would serve as a useful wake-up call to everyone else, a reminder that actions can have some serious consequences.

The concept of 'moral hazard' has been one that has dogged central bankers for quite a while but probably isn't a conundrum that can actually be solved. One could argue the above was tried with Lehman with quite serious consequences........

Concept of moral hazard is recognized, but it's widely ignored too. The irony of UBS getting to pick the bones of CS is rich.

"Are we the bad bank?"

[untakenname]

Just been reading up about AT1 bonds, surely with them now suddenly not being honoured it will cause the rest of the investors holding them in other banks look to try and redeem?

https://www.cityam.com/explainer-whats-an-at1-bond...

[JagLover]

Tango13 said:

My knowledge of banking extends to watching 'Margin Call' and 'The Big Short' but I have thought that letting one bank fail would serve as a useful wake-up call to everyone else, a reminder that actions can have some serious consequences.

It is more a question of who it is supposed be a wake up call for?

Is it for shareholders as they often get hammered in these bailouts?. In 2008 we were close to returning to a great depression level of crisis so in that case the "reminder" would be for the general public enduring such conditions.

[Adam.]

Tango13 said:

My knowledge of banking extends to watching 'Margin Call' and 'The Big Short' but I have thought that letting one bank fail would serve as a useful wake-up call to everyone else, a reminder that actions can have some serious consequences.

Yeah letting Lehmans fail went well last time

[Kawasicki]

Sorry if this is a stupid question... what happens if I buy a few shares in CS at the current extremely low share price?

If the bank goes pop, I lose my money. OK.

But I have the feeling that a lot will be done to avoid just that.

[Adam.]

Gweeds said:

UBS down 9% on opening, and CS down 60% - I assume the CS shareholders will be taking this haircut?

UBS yes

CS shareholders are getting UBS shares (1 per 22 CS share) the equivalent 0.76CHF per share - so 60% less than Fridays close.

What is surprising is they are getting anything, AT1 bondholders are supposedly higher up the pecking order but they are losing 100%