Credit Suisse - Is it going to go bust, if so what happens?
Discussion
Kawasicki said:
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.
People like Paul Murphy (FT) thought this way in 2010 when he predicted Barclays would go back to £5 a share from peanuts but the truth is, the western economic and financial system is treading water.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.
the main issue is that most of these euro banks don't make any money or, if they do , they are stuffed to the gills with toxic management or, toxic investments.
if you buy anything in euro bank stocks , if you get anything better than break even you have won the competition.
look at the Barclays/Unicredit/Sabadell share price graphs, the list goes on.
apart from Unicredit the other one to watch is Man Group (MAN). apparently they fixed their trade algo years ago so it still makes a profit in a downturn. if it goes down through £2 a share then there's a suspicion that they have not and their 35% profit margin looks unsustainable.
in equities when we hit a big correction (if this is a big correction ) the first drop is not usually the biggest, this is just the relief rally until something else triggers a huge selloff (maybe, maybe not ).
Edited by Carl_Manchester on Monday 20th March 11:21
things were tight already at CS, they were unable to reduce their costs and their revenues were flat.
Source: https://seekingalpha.com/article/4539059-credit-su...
They were paying too many people 200-250k GBP salaries and when they started to eliminate these mid-level (cough) hires, they could not back-fill them with people who were competent enough to do the roles and therefore ended up paying the usual suspects enormous contract day-rates which then exasperated the problem of slowing down the separation of the IB unit.
What they really needed to do was somehow accelerate the exit from Investment Banking without ballooning the wage bill but, as anyone who has worked on these types of separation programmes before, it takes years, at least 3 years but typically 5-7.
Ironically, if you try and accelerate these types of programmes, your operational costs go up, at least in the short to medium term.
OK so the separation did not happen quickly enough at CS and you could argue, it took the rest of the bank with it. Almost identically, the same thing could/should/would happen at Deutsche Bank as well but for some reason, they are just managing to keep their head above water.
Source: https://seekingalpha.com/article/4539059-credit-su...
They were paying too many people 200-250k GBP salaries and when they started to eliminate these mid-level (cough) hires, they could not back-fill them with people who were competent enough to do the roles and therefore ended up paying the usual suspects enormous contract day-rates which then exasperated the problem of slowing down the separation of the IB unit.
What they really needed to do was somehow accelerate the exit from Investment Banking without ballooning the wage bill but, as anyone who has worked on these types of separation programmes before, it takes years, at least 3 years but typically 5-7.
Ironically, if you try and accelerate these types of programmes, your operational costs go up, at least in the short to medium term.
OK so the separation did not happen quickly enough at CS and you could argue, it took the rest of the bank with it. Almost identically, the same thing could/should/would happen at Deutsche Bank as well but for some reason, they are just managing to keep their head above water.
vaud said:
Professional services will cover all manner of things - legal, audit, tax, outsourced IT (the latter will be quite a big number)
of course, the arguement being that CS tried to reduce its wage bill but ended up doing the reverse. they were then hit with capital outflows, increasing operational costs and lower revenue spelled the beginning of the end.
I was replying, I suppose to the question of 'where did all the money go' . it's easy to burn through tens of billions just keeping something like this afloat.
JagLover said:
"If you have any money in Germany’s largest bank, the only rational move right now is to get it out. Once a run like this starts it is impossible to stop."
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