The Swiss are extremely pissed. They spent a lot of capital and time to put up the to big to fail laws which this bank met yet it still failed.

CS paid over 32 Billion in bonuses since 2013![1] Meanwhile people aren't getting paid more to balance the inflation.

I also see a lot of US blaming going around specifically because of the capital regulations that the EU and Switzerland put in place since 2008 and supposedly the US did not. Also supposedly profited over them because they did not need to meet as strict of capital requirements. I don't hear much about SVB however.

The news has also reported that the Swiss government wanted to let the US branch of CS fail but there was enormous pressure from the US to prevent this.

There are a lot of details of this deal that aren't clear yet but I do have the feeling everyone here more or less agrees this was the only option. The focus seems to be on why it came to this situation in the first place. There is also a push from some parties for a government investigation.

I also expect the next pension law adjustment coming up to have a very hard time after all this.

[1] https://www.blick.ch/politik/trotz-hilfe-vom-staat-darum-sol...

Edit: Spelling

Interesting reading. The bit that really jumped out at me was this: "Saudi National Bank — the Swiss bank’s largest shareholder" -> so here we have part of the problem, with all of these banks owning all or some of each other it is no wonder that when one of them gets into trouble the others are immediately discounted on the stock market. Not only do they get indirectly affected because they likely engage in similar practices, they also are interlinked through various stock holdings. And the solution here? More such linkage! Why didn't the Swiss government or the Swiss national bank end up owning it? Instead it is now - again - part of another such complex.

You have to wonder how long it will be before UBS will have to be rescued.

Another random thought: If even the Swiss can't keep it together financially we're in real trouble.

There was a question last week about mark-to-mark accounting for banks in the wake of the SVB failure. The question was (to paraphrase): why aren't banks forced to mark every asset for every financial statement. This article pretty comprehensively describes why such a thing is not really possible, let alone desirable.

In regards to this article, I have to laugh at the asset managers holding cocos who thought that they were trading pseudo-warrants. I respect the shamelessness of these guys to try and blame other people for their own mistakes -- a lot of portfolio managers were successfully able to convince investors that their losses during the GFC were due to the ratings or govt agencies -- but they're not going to convince the central banks to eat the losses on this one. There is absolutely no incentive to make Swiss taxpayers eat tens of billions of losses because some fund manager didn't read the literal name of the instrument he was buying.

I find this stage of the economic/business cycle to be truly fascinating. A lot of things happen in such a short amount of time that we typically only read about or see in movies

UBS's main calculus is risk, which is why the offer can double in a matter of hours. If the crisis is not stabilised, UBS could potentially be liable for tens of billions and face potential downfall.

This is why UBS needed a guarantee from the Swiss National Bank and a MAC clause to proceed with the deal.

And I am not convinced it is a good deal for UBS.

Credit Suisse went from ~$4 billion minor problem in August to we need ~$54 billion to "Switzerland is offering UBS $100 billion "safety" loan and gives it to you for free and regardless if you want it you are getting it this weekend."

The interesting part is the part about the AT1 "bonds". I put them in quotation marks because according to the article, they are more like a form of subordinate equity. In some ways. Weird and fascinating instrument, it's not often I come across a new one.

I'm surprised Matt Levine would write a somewhat clickbaity title.

If the net equity value of Credit Suisse was very low or perhaps even negative, depending on the accounting, then UBS in fact paid quite a high price because of all the liabilities.

Well, its was worth almost nothing, so there.

There are a couple 1000 people who will be awaiting a salary this or next week, it is a bit a financial pandorras box, but with the properties of a bottomless pit.

In all seriousness, I know a couple cs folks with rather expensive flats and habits, this will not end too good for some of them.

"Banks are speculative investment funds grafted on top of critical infrastructure", no, they're not supposed to be. That's why there's rules about percentage of depositors money that is risked. Basel III rules.

So many good sentences and one-liners just in the first paragraph of this article.

The reason the bank is worth nothing is because it's all liabilities (responsibility to provide customer deposits) and no profit.

However it's similar to when people fight over the most important projects and tickets in a company. They fight over something with "negative" value (more work, risky initiatives) because it increases how "critical" or important they are to the company which can be leveraged into far more value later on.

Nothing plus a mountain of potentially toxic liabilities.

It's not exactly a slam dunk deal.

Nohting... Plus all the skeletons in the closet (a.k.a bad debt)

Earlier this week I started reading both The Panama Papers and Moneyland. The hope is that they'll help make sense of such insensible things.

Is someone going to make a ChatGPT synthesis of Matt Levine's writings?

Imagine you have, like, a writer who is really knowledgeable about a subject, and you have readers who would like to learn about this subject, but also have limited time. And, I mean, the writer is really prolific and sometimes feels almost a bit too verbose. In these kinds of markets, sometimes there is no deal to be struck, and...that's fine? But imagine if there were an intermediary who could summarize the writing in a way more accessible to people who are casually interested.

Nothing? More like overleveraged $1T that can explode anytime? UBS should have been paid instead to take the CS corpse.

That's what my mother in law said about our baby. HA!

So the solution to the banking collapse is to create even MORE too-big-to-fail monopoly banks? The corruption has gotten so far out of control at this point it's laughable.