ECON [FINANCE] 2023 Banking Crisis DEATHBURGER Thread 2023.2.0 will UBS actually eat Credit Suisse before the Open???
- Thread starter night driver
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Profit of Doom
Dismember
vector7
Dot Collector
Buffett sold 91% of his stake in USB in Q4. Won't be a terrible trade to rebuy 30% lower.
View: https://twitter.com/zerohedge/status/1637228253260701698?t=kR3qRX75CbGIdTNlA-rJEw&s=19
*SENIOR BIDEN OFFICIALS IN TOUCH WITH BUFFETT ON BANKS
View: https://twitter.com/zerohedge/status/1637218321140416513?t=uEX8WJPuUJjoOewQgFsbyw&s=19
BREAKING: Warren Buffet Brought in to Solve Banking Crisis – OVER 20 PRIVATE JETS LAND IN OMAHA ON SATURDAY
View: https://twitter.com/gatewaypundit/status/1637531718960787458?t=C5CFbPJFxM4g5Z1OFmv4JQ&s=19
View: https://twitter.com/zerohedge/status/1637228253260701698?t=kR3qRX75CbGIdTNlA-rJEw&s=19
*SENIOR BIDEN OFFICIALS IN TOUCH WITH BUFFETT ON BANKS
View: https://twitter.com/zerohedge/status/1637218321140416513?t=uEX8WJPuUJjoOewQgFsbyw&s=19
BREAKING: Warren Buffet Brought in to Solve Banking Crisis – OVER 20 PRIVATE JETS LAND IN OMAHA ON SATURDAY
View: https://twitter.com/gatewaypundit/status/1637531718960787458?t=C5CFbPJFxM4g5Z1OFmv4JQ&s=19
Blacknarwhal
Let's Go Brandon!
I think I missed the memo on this one; what's the response for this look like? Will regular cash actually have value after all this hits, or is it a better play to leave cash in to address what comes after all this?
FedNow is NOT CBDC. It’s just an Instant Payment System that moves your normal existing dollar digits from sender to recipient in seconds.
A CBDC *could* eventually ride on the FedNow payment rails but for now it is a glorified and somewhat better Fed version of Venmo or CashApp without the middleman.
Melodi
Disaster Cat
2008 was similar to the current period but took time to manifest fully. The first apparent signs were a stock market crash in Asia which some of us here on the forum sat up all night watching and playing the drinking game (I had tea). But other things were not so apparent until they happened overnight, which in the case of Ireland was a literal situation.
Even I was surprised when we woke up one morning, and the Irish government had been up pretty much all night. They had gotten a call about 3 AM telling them that they nationalized the banks or there would be a bank closer and bank "holiday" by 8 AM. The call was from some VIP bank regulator representing the EU.
So while it wasn't called "nationalization," by morning, the two leading banks in Ireland were essentially government-owned, and things started to go to pieces within hours. Within weeks, businesses that had exsited for 300 years went under for reasons described in some of the previous posts. Neither bank would provide the regular monthly "loans" that had been the primary business model for the last 100 years. Smaller enterprises and family businesses used those loans to make payroll and bills before their monthly profits came in. They were almost always paid back by the end of the month, so they were "bridge loans" to create a bridge between when the money was needed and when it was earned.
With no warning, that stopped immediately, so the smaller places fell apart nearly overnight, especially in the towns and villages. Even today, more than a decade later, many businesses are still boarded up with peeling paint and names like So and So and Sons 1785 painted above the door. The large corporations didn't want them, and they had the money to tie them over until things sorted again.
I did a blog during this period called "Who Stole Ireland's Christmas." Being broke, many, if not most, of the small towns and villages went dark after a hundred years of fantastical light displays to push back the deep darkness of midwinter. It was not a fun time even if my family was lucky and we didn't suffer as much as our neighbors did, and that was sad and terrible to watch. Many young people left the country, and most have never returned.
Even I was surprised when we woke up one morning, and the Irish government had been up pretty much all night. They had gotten a call about 3 AM telling them that they nationalized the banks or there would be a bank closer and bank "holiday" by 8 AM. The call was from some VIP bank regulator representing the EU.
So while it wasn't called "nationalization," by morning, the two leading banks in Ireland were essentially government-owned, and things started to go to pieces within hours. Within weeks, businesses that had exsited for 300 years went under for reasons described in some of the previous posts. Neither bank would provide the regular monthly "loans" that had been the primary business model for the last 100 years. Smaller enterprises and family businesses used those loans to make payroll and bills before their monthly profits came in. They were almost always paid back by the end of the month, so they were "bridge loans" to create a bridge between when the money was needed and when it was earned.
With no warning, that stopped immediately, so the smaller places fell apart nearly overnight, especially in the towns and villages. Even today, more than a decade later, many businesses are still boarded up with peeling paint and names like So and So and Sons 1785 painted above the door. The large corporations didn't want them, and they had the money to tie them over until things sorted again.
I did a blog during this period called "Who Stole Ireland's Christmas." Being broke, many, if not most, of the small towns and villages went dark after a hundred years of fantastical light displays to push back the deep darkness of midwinter. It was not a fun time even if my family was lucky and we didn't suffer as much as our neighbors did, and that was sad and terrible to watch. Many young people left the country, and most have never returned.
mzkitty
I give up.
I remember people where I worked were choking, flabbergasted, that at least 30% of their portfolios simply disappeared.
Does that help?
Twisted
Contributing Member
Back in 08 I tried telling a few friends to mind their retirement accounts to minimize their losses. As I lost about 3%, I listened to them complain of how much worse it was on them for not listening to me. Now I don't have to worry about that because I've already spent it all on useless metals and things that will last lol
Plain Jane
Just Plain Jane
I am glad to see that Glass-Steagall at least came up for discussion in Congress.
KMR58
Veteran Member
2008 was a huge wake-up call for us. We were one of those small businesses here in the USA. Immediately cutoff by our bank and interest rates rose to 29%. We could not survive after having a healthy 17 year business. We finally bit the bullet in early 2010 closing our doors. By then we had spent every dime we could find to try and keep it open and pay payroll. All that did was suck us dry. We learned, however, and this go-round is very different. I’m thankful for 2008. It taught us the best lessons. We have our priorities in the right place this time and I think it is going to be far worse than 2008. Babylon is falling. Get out of her while you can.
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Marthanoir
TB Fanatic
Jeez yeah remember it well, I was in financial services at the time, took a while but eventually lost my job, it was only the good redunancy package and our preps that kept our head above water ( barely)
This time around looks set to be even worse.
jward
passin' thru
It was different, and worse, in 08. I recall our bodies themselves told us the story, with clenched tummies and loose bowels, before our brains fully groked it.
Personally it wasn't too bad; one of us went on strike, and the other was laid off, but we had resources, and had always understood financial vehicles were magic money, smoke and mirrors unless we held it in our hot lil hands- easy come and easy go..
Perhaps it's simply because I no longer much care, but this is not registering like the 08 incident. It's all kabuki theatre and I count my real store o' wealth in the orchard and woodlots and the seedlings waiting to be planted, then harvested, to nourish loved ones or to be stored against next winters' want.
jward
passin' thru
Analysis: Credit Suisse rescue presents 'buyer beware' moment for bank bondholders
5 minute read
March 20, 2023
6:17 AM CDT
Last Updated 18 min ago
- Summary
- Companies
- Additional Tier 1 debt holders wiped out
- Assumption had been AT1 holders would outrank equity holders
- Approach roils wider bank bond and stock markets
- C Suisse prospectus stated AT1 bonds would be written off
Not only did investors discover they are the only investors not getting any compensation but that the long-established practice of giving bondholders priority over shareholders in debt recovery had been turned on its head.
Banks had already been paying far more this year than in the past for such hybrid capital, and now there would be no takers, analysts said.
Swiss authorities brokering Credit Suisse's (CSGN.S) rescue merger with UBS (UBSG.S) have said 16 billion Swiss francs ($17 billion) of its Additional Tier 1 (AT1) debt will be written down to zero.
That is the largest loss in the $275 billion AT1 debt market to date, dwarfing the 1.35 billion euros lost by bondholders at Spain's Banco Popular in 2017.
AT1 bond holders rank below those holding equity stakes in Credit Suisse who can expect to receive 0.76 Swiss francs per share.
That shock rippled through financial markets on Monday, causing bank credit default swaps to widen and stocks to fall. MSCI's world bank stock index (.MIWO0BK00PUS) stood at 84, down from 100 in two weeks.
European bank shares and AT1 bonds from other European banks tumbled as traders re-priced the risk and cost of banks' capital.
Bid prices on AT1 bonds from banks including Deutsche Bank , HSBC , UBS and BNP Paribas dropped 9-12 points on Monday, sending yields sharply higher, data from Tradeweb showed.
A UBS AT1 bond that is callable in January 2024 was trading at a yield of nearly 29%, up from 12% at the start of last week, demonstrating how much more costly such debt could become.
A London-listed exchange-traded fund which tracks banks' AT1 debt (INAT1.L) tumbled 15.7%.
"With the restructuring of Credit Suisse, no-one had really thought about how it would affect the AT1 and that was a fat tail risk," said Sean Darby, global equities strategist at Jefferies in Hong Kong.
The issue lay not in the structure of such debt but how markets were unprepared for this outcome in a debt structuring, he said.
"What the market is saying today, is that between now and maturity there's a risk on this debt which hadn't been priced correctly in light of what's happening in banks in the U.S. and around the world."
At Credit Suisse itself, dollar AT1 bonds were bid as low as 1 cent on the dollar, Tradeweb pricing showed, as investors braced for the wipeout. ,
"When an investor buys an AT1 he knows he's down the capital structure compared to senior. But he assumes he's above equity," Steven Major, global head of fixed income research at HSBC, said on the phone from Melbourne.
Created in the wake of the global financial crisis, AT1 bonds are a form of junior or hybrid debt that counts towards banks' regulatory capital.
They were designed as a part of total loss-absorbing capacity (TLAC) bonds to provide a 'bail-in' or a way for banks to transfer risks to investors and away from taxpayers if they got into trouble.
The AT1 bonds, which also carry a higher coupon, can be converted into equity or written down when a lender's capital buffers are eroded beyond a certain threshold.
AT1 write-downs have taken place in several countries, including Spain, Greece, Austria and Denmark.
PROSPECTUS WAS CLEAR Deutsche Bank analysts said in a note: "We think this is quite negative for AT1 and broader TLAC securities worldwide as it highlighted the inherent risks present in these instruments."
John Likos, director at BondAdviser, a debt research house and asset manager, said Australian AT1s contain provisions that would make it very difficult for local regulators to engineer a Credit Suisse type situation where hybrids went to zero while equity holders recovered some value.
"Bizarre, strange parallel universe that equity gets something and hybrids don't," Likos said.
Yet in the case of Credit Suisse, however, the AT1 prospectus made clear that hybrid (AT1) holders would not recover any value.
It said in the event of a write-down "interest on the Notes shall cease to accrue, the full principal amount of each Note will automatically and permanently be written-down to zero, Holders will lose their entire investment in the Notes...".
It also said Swiss regulator FINMA "may not be required to follow any order of priority" meaning that the AT1 could be cancelled before the equity. "It was clear in the prospectus but people hadn’t read it. I strongly believe if SNB had not been sleeping at wheel they would have forced earlier restructuring, sought more liquidity and encouraged them to look at asset sales …it’s just they wanted a Swiss solution,” said Rupak Ghose, a financial industry strategist and former Credit Suisse employee.
U.S. bank Goldman Sachs Group Inc (GS.N) traders were preparing to take bids on claims against Credit Suisse AT1 bonds, Bloomberg News reported on Sunday, citing people familiar with the matter.
Reuters Graphics
Credit spreads on banks should widen further, analysts said. Swap spreads on U.S. banks, indicated by the ICE BofA index (.MERC0P0), have already moved to 198 basis points from 128 in early March. For BBB-rated European banks (.MEREBB4), the spread is up 50 bps in a month to 174.
"If you take 10% yield on something when the government security is 4%, then you're earning a lot of extra yield for a reason. But you did enter this thing believing that you'd be senior to the equity holders, that's the thing that people are worried about."
Additional reporting by Lewis Jackson in Sydney, Summer Zhen and Xie Yu in Hong Kong, Ankur Banerjee and Anshuman Daga in Singapore and Yoruk Bahceli in Amsterdam; Writing by Vidya Ranganathan; editing by Simon Cameron-Moore and Jason
/cloudfront-us-east-2.images.arcpublishing.com/reuters/KZCPG46H4FJUHD7GCQPUKS4Z4U.jpg)
Analysis: Credit Suisse rescue presents 'buyer beware' moment for bank bondholders
The rudest shock in the rushed deal to save embattled Swiss lender Credit Suisse Group AG was reserved for the holders of the bank's riskiest tranche of bonds.
www.reuters.com
Plain Jane
Just Plain Jane
The thing that I think about is that on 2008 there were about $250 trillion in credit default swops in a world economy of about $70 trillion. I saw somewhere that now there are quadrillions in credit default swops. I don't know how big the world economy is but I doubt that the growth is anything near compatible.
I kept trying to tell people that Dodd-Frank didn't solve the problems but no one would listen.
We need Glass-Steagall!
doctor_fungcool
TB Fanatic
What we have witnessed so far is the canary in the coal mine effect...the real pain is yet to come and when it dies it will be a nightmare.
jward
passin' thru
iNewsroom
@iNewsroom
1m
SVB: TRADING OF COMPANY'S COMMON STOCK AND COMPANY'S DEPOSITORY SHARES ON NASDAQ WILL BE SUSPENDED ON MARCH 28TH.
SVB FILES FIRST DAY MOTIONS TO ASSIST CONTINUED OPERATIONS OF SVB CAPITAL AND SVB SECURITIES AND PRESERVE VALUE FOR STAKEHOLDERS...
ECB'S VISCO: THE EURO ZONE FINANCIAL SYSTEM IS NOT DIRECTLY EXPOSED, BUT FACES A CONTAGION THREAT.
ECB'S VISCO: WE HAVE ALL OF THE TOOLS TO COUNTER ANY LIQUIDITY CRISIS.
ECB'S VISCO: THE EURO ZONE NEEDS TO QUICKLY IMPLEMENT A DEPOSIT PROTECTION TOOL, LIKE THE ONE THAT THE UNITED STATES HAVE.
@iNewsroom
1m
SVB: TRADING OF COMPANY'S COMMON STOCK AND COMPANY'S DEPOSITORY SHARES ON NASDAQ WILL BE SUSPENDED ON MARCH 28TH.
SVB FILES FIRST DAY MOTIONS TO ASSIST CONTINUED OPERATIONS OF SVB CAPITAL AND SVB SECURITIES AND PRESERVE VALUE FOR STAKEHOLDERS...
ECB'S VISCO: THE EURO ZONE FINANCIAL SYSTEM IS NOT DIRECTLY EXPOSED, BUT FACES A CONTAGION THREAT.
ECB'S VISCO: WE HAVE ALL OF THE TOOLS TO COUNTER ANY LIQUIDITY CRISIS.
ECB'S VISCO: THE EURO ZONE NEEDS TO QUICKLY IMPLEMENT A DEPOSIT PROTECTION TOOL, LIKE THE ONE THAT THE UNITED STATES HAVE.
jward
passin' thru
Jonathan Mesiano-Crookston ️#COVIDisAirborne
@jmcrookston
1m
Now, perhaps this is an isolated bank issue. Or perhaps the toxic chemicals are not that bad.
But my point: you're only going to hear one possible answer out of the untrained people in charge after any of these crises. And what they say may bear no resemblance to the truth
View: https://twitter.com/jmcrookston/status/1637790427691511810?s=20
@jmcrookston
1m
Now, perhaps this is an isolated bank issue. Or perhaps the toxic chemicals are not that bad.
But my point: you're only going to hear one possible answer out of the untrained people in charge after any of these crises. And what they say may bear no resemblance to the truth
View: https://twitter.com/jmcrookston/status/1637790427691511810?s=20
psychgirl
Has No Life - Lives on TB
Interesting. Really, interesting tweet
jward
passin' thru
Washington Examiner
@dcexaminer
1m
As proof that the crisis in the banking sector isn’t yet over, @FirstRepublic
Bank lost value again this morning, even after a group of big banks said they would provide $30 billion in deposits in a show of confidence.
Stock plunged by over 20%.
View: https://twitter.com/dcexaminer/status/1637794249440722947?s=20
@dcexaminer
1m
As proof that the crisis in the banking sector isn’t yet over, @FirstRepublic
Bank lost value again this morning, even after a group of big banks said they would provide $30 billion in deposits in a show of confidence.
Stock plunged by over 20%.
View: https://twitter.com/dcexaminer/status/1637794249440722947?s=20
momma_soapmaker
Disgusted
I have an uncle who lost almost a smooth million in his 401k. It was an excruciatingly painful lesson. I tried talking to him prior, but his financial advisor insisted it couldn't possibly get that bad.
I have the picture in my mind this morning of a classic shell game. Only there's nothing under any of the shells. 
Whatever. It's been a long time coming, and the Boomers on down have had a generally easy time of it across the long post-WWII era. Historically speaking, there's bound to be something to come along upsetting the applecart pretty quick.
Use your head, don't panic, take care of your own.
Whatever. It's been a long time coming, and the Boomers on down have had a generally easy time of it across the long post-WWII era. Historically speaking, there's bound to be something to come along upsetting the applecart pretty quick.
Use your head, don't panic, take care of your own.
Very interesting - thanks
night driver
ESFP adrift in INTJ sea
IF first Republic keeps sliding, sooner or later they are going to hit something that has to be shored up. And THAT will start SCHTUFF that we really don't want to take care of.
And it MAY be a very small SOMETHING...
And it MAY be a very small SOMETHING...
Same here. I tried to get my sister to move hers. It went from over 400,000 to 20,000.
night driver
ESFP adrift in INTJ sea
The DOW Futs are up about 100, but they ain't CLOSE to that strong.....
NASD and Russell are both ugly, Dow is up 3 digits but....We shall see.
NASD and Russell are both ugly, Dow is up 3 digits but....We shall see.
hiwall
Has No Life - Lives on TB
Doing anything now with the Glass-Steagall would amount to nothing or make things worse.
Let's say CONgress ignored all the payoffs they received from the banking sector and brought back Glass-Steagall. When it came back in force all the banks would have to dump billions or trillions of dollars of "investments" and many or most would be at a loss. The banks could not survive that.
Let's say CONgress ignored all the payoffs they received from the banking sector and brought back Glass-Steagall. When it came back in force all the banks would have to dump billions or trillions of dollars of "investments" and many or most would be at a loss. The banks could not survive that.
Profit of Doom
Dismember
We are far above average, thank you very much!Wait...what??!!
Profit of Doom
Dismember
Gotta watch those emissions! Can’t they jet pool?
night driver
ESFP adrift in INTJ sea
+325-ish, WE'RE SAVED!! SAVED I TELL YA, SAVED!!!!
{/sarc}
{/sarc}
Profit of Doom
Dismember
I remember reading something here concerning the Royal Bank of Scotland and six months. I moved my 401k to cash. It wasn’t huge, but I saved it.
Milk-maid
Girls with Guns Member
Yes, I feel like this is just the tip of the beginning and it will get much worse.
SmithJ
Veteran Member
It would seem to me that the Credit Suisse deal which puts shareholders in front of bondholders is a change that could really damage banks ability to raise capital. And damage the bond market as well. I may be wrong, but I don't recall shareholders ever being in front of bondholders before.
Didn't JGF call this a dead cat bounce?
rt 12:08
ALERT! Central Banks To Provide "UNLIMITED LIQUIDITY" To The Banking System. Mannarino
bw
Fringe Ranger
They're desperately trying to put on the best happy face they can. Reading between the lines, the people who know what's going on are terrified.
hiwall
Has No Life - Lives on TB
westernalliancebancorporation.com
Western Alliance Bancorporation is a regional bank holding company headquartered in Phoenix, Arizona. It is on the list of largest banks in the United States and is ranked 13th on the Forbes list of America's Best Banks
20Gauge
TB Fanatic
I can not argue.
20Gauge
TB Fanatic
Yep these are still the easy fixes.... the hard ones are still in the future
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