Book Closes On Credit Suisse After 167 Years
Going once, going twice, sold! For a princely CHF0.76.
Credit Suisse was forced into the arms of rival UBS on Sunday. Or maybe I should say UBS was forced to embrace Credit Suisse. Both descriptions were probably accurate.
The final terms of a deal cobbled together over a hectic 48 hours found UBS paying three times more for Credit Suisse than it offered initially, but still far below Credit Suisse's market value as of last week's close, which was itself well below the prior week's close, and
Another weekend, another crisis averted (?)!
Ah, shotgun wedding season!
A moment of silence for what I will always think of as CSFB and the many fine people there who had nothing to do with CS’ downfall.
I’ve been doing some navel-gazing. Over the past week(s), I’ve done my best to rationally assess the situation based on available data, and have repeatedly reached the wrong conclusions. Not necessarily that I’ve read the balance sheets wrong, but what counts is the market reaction, and on that score I’ve been wrong.
I’m not even a pollyanna bull. I’m bearish, have expected SP500 to go substantially lower, have portfolios set up very defensively. But the extent and source of instability, fear, and contagion have surprised me. Which suggests risk is higher, and outlook worse, than I thought. More wrong.
Thinking back, what period does this remind us of? It is not a reassuring answer.
The read-through from the AT1 wipeout could be bad. People are going to look at that and say “Hmm, if it can happen there…”
“how about down here, buddy? No, off that, actually how about down here? And so on and so on.”
Thanks for the rapid and experienced analysis of the inevitable end of CS. I hope the Swiss refrained from snark as the international financial web is very interconnected given the story weaves through SVB in the US and a Saudi banker as a catalyst.
It puts a lot of pressure on Powell and company at the Fed…
Personally I’m positioned for the market to gamble on the “Fed Put” (and hopefully I won’t get greedy and get out before the reality of collapse).
FYI I’m really impressed with OpenAI as it can quickly unpack jargon/history:
“As a financial market expert please describe in detail and with historical examples the term the Fed Put”
Maybe the fact that they thought it was a good idea to lend money to Trump when no US bank would touch him speaks to the problems with leadership at this institution?
Well, we’ve learned one lesson. Whether you are in management or an investor, if your bank is in trouble, it might be best to keep your mouth shut. SVB proved that reassurances don’t necessarily reassure, while the Saudis proved that talking down your book works surprisingly quickly.