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

[Condi]

Matt Levine had a good take on the AT1s and the general process last night in his email, if you subscribe.

Bonds trading at 2-5.

[vaud]

Carl_Manchester said:

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.

All banks outsource some element of IT, even GS. Keeps the FTEs down and makes staffing (or staff augmentation) someone elses problem.

[ooid]

Whoozit said:

isaldiri said:

ooid said:

So where is this famous CS Junior Bond Escaped the wipeout? Looks like it is supposed to be REG S and the 144A but can't find it on CS's DC structure?

this I believe is the one

https://www.credit-suisse.com/media/assets/corpora...

A quick read of the relevant write down terms (page 64-65) suggests the triggers for a write down weren't met. 7aii says it's a 5% trigger for a defined capital base, 7aiii says it has to be a general write down across the defined capital stack. IANAL but I spent many years reading and drafting prospectuses.

I can't find this one on their Debt capital structure though? it's not listed. (Well, I'm looking at through S&P Capital IQ Pro at least, maybe not updated but all other debts there, including the rest of AT1s)

[isaldiri]

ooid said:

I can't find this one on their Debt capital structure though? it's not listed. (Well, I'm looking at through S&P Capital IQ Pro at least, maybe not updated but all other debts there, including the rest of AT1s)

There are live prices....

[Adam.]

vaud said:

All banks outsource some element of IT, even GS. Keeps the FTEs down and makes staffing (or staff augmentation) someone elses problem.

Spent many years at GS, 30%+ of their FTE works in ITs, struggling to think of much that is o/s
Worked for CSFB for 2 years (20 years ago) - their reliance on contracting staff was staggering. 30-40% of people in finance (mostly Oz, Kiwi and Saffers making very generous per hr rates). Also staggering layers of inefficiency, poor cost control and legacy systems

[Gecko1978]

Adam. said:

vaud said:

All banks outsource some element of IT, even GS. Keeps the FTEs down and makes staffing (or staff augmentation) someone elses problem.

Spent many years at GS, 30%+ of their FTE works in ITs, struggling to think of much that is o/s
Worked for CSFB for 2 years (20 years ago) - their reliance on contracting staff was staggering. 30-40% of people in finance (mostly Oz, Kiwi and Saffers making very generous per hr rates). Also staggering layers of inefficiency, poor cost control and legacy systems

That was time I was there for all the upsides (it was a fancy investment bank atmosphere) getting paid half of what someone else was getting was enough for me to say cya and head to HSBC IB an from there to contracting. Still CS was a good learning experience

[Adam.]

Gecko1978 said:

That was time I was there for all the upsides (it was a fancy investment bank atmosphere) getting paid half of what someone else was getting was enough for me to say cya and head to HSBC IB an from there to contracting. Still CS was a good learning experience

I was there for only 1999-2000 but was great fun in that time. Nice people and learnt a lot - first IB job so mainly what an IB was and did, but also how not to do stuff, how organic growth > bolt-on companies, and how not to manage

[fido]

Murph7355 said:

There were similar amusements in 2008...Northern Rock, Hbos, Lloyds...

Nothing was really learnt. Our whole system would have had to change.

Well the first two banks, yes, but Lloyds didn't do anything wrong (other than to agree a merger with the failed HBOS!)
They have always been prudent and kept a healthy ratio of retail savings to loans.

[turbobloke]

fido said:

Murph7355 said:

There were similar amusements in 2008...Northern Rock, Hbos, Lloyds...

Nothing was really learnt. Our whole system would have had to change.

Well the first two banks, yes, but Lloyds didn't do anything wrong (other than to agree a merger with the failed HBOS!)

Wasn't that one of Gordon's pet projects?

[fido]

turbobloke said:

Wasn't that one of Gordon's pet projects?

Interesting (circular) fact is that UBS did the due diligence for that merger.

[Gecko1978]

fido said:

Murph7355 said:

There were similar amusements in 2008...Northern Rock, Hbos, Lloyds...

Nothing was really learnt. Our whole system would have had to change.

Well the first two banks, yes, but Lloyds didn't do anything wrong (other than to agree a merger with the failed HBOS!)
They have always been prudent and kept a healthy ratio of retail savings to loans.

We won't ever know of LBG would have collapsed but rumour at the time was if HBOS had not merged with LBG an just been nationalised like RBS, LBG had about 2 weeks left to live I don't think either way it looked tok rosey

[Carl_Manchester]

Deutsche Bank AG 5 Year CDS has blown up (again).



Contagion, lack of confidence, we might get another rung down here. It could be the big drop.

[Digga]

Carl_Manchester said:

Deutsche Bank AG 5 Year CDS has blown up (again).



Contagion, lack of confidence, we might get another rung down here. It could be the big drop.

Wondered why there was a DB PR puff-piece in City AM today.

[isaldiri]

Well it's probably somewhat of an exaggeration to call the DB CDS move yesterday as 'blowing up'......... but they are clearly next on the hit list it seems with financial markets in the mood to test the limits of what the central banks are going to be willing to do.

[turbobloke]

isaldiri said:

Well it's probably somewhat of an exaggeration to call the DB CDS move yesterday as 'blowing up'......... but they are clearly next on the hit list it seems with financial markets in the mood to test the limits of what the central banks are going to be willing to do.

Have the Italian so-called zombie banks recovered sufficiently in recent years to be immune?

[Carl_Manchester]

isaldiri said:

Well it's probably somewhat of an exaggeration to call the DB CDS move yesterday as 'blowing up'.........

[JagLover]

I'll put him down as in the pessimist camp

https://www.spectator.co.uk/article/deutsche-banks...

[DeejRC]

I did say I was being mischievous about DB

[Carl_Manchester]

JagLover said:

I'll put him down as in the pessimist camp

https://www.spectator.co.uk/article/deutsche-banks...

"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."

[Earthdweller]

Carl_Manchester said:

JagLover said:

I'll put him down as in the pessimist camp

https://www.spectator.co.uk/article/deutsche-banks...

"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."
]

Eeek,

Didn’t we have a thread on this


“A Deutsche collapse could bring the euro down with it. Unless the government and the central bank can shore it up over the weekend, very soon the entire currency will be in deep trouble.”