ECON [FINANCE] First Deathburger Thread of the 2023 Banking Crisis. ALL welcome (hall passes at the door). Have At It.
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vector7
Dot Collector
NBC's Chuck Todd outlines the economic woes under Biden:
Inflation "remains stubborn" as "prices continued to rise in February"
"Supply chain has been slow to recover"
"Millions dropped out of the workforce"
But I was told by Biden that "inflation would be transitory"
RT 30secs
View: https://twitter.com/Brick_Suit/status/1637469969431805952?t=9r3oV3KjGarJzqlWQm6JZA&s=19
Inflation "remains stubborn" as "prices continued to rise in February"
"Supply chain has been slow to recover"
"Millions dropped out of the workforce"
But I was told by Biden that "inflation would be transitory"
RT 30secs
View: https://twitter.com/Brick_Suit/status/1637469969431805952?t=9r3oV3KjGarJzqlWQm6JZA&s=19
psychgirl
Has No Life - Lives on TB
That’s because they’re all liars.
Simple.
hiwall
Has No Life - Lives on TB
The dozen years of zero percent interest has screwed everyone, the public, the banks, and the corporations.
There is no fixing that now. As they have been talking about , it will be a hard landing. Doesn't matter what the Fed does with interest rates now at this point.
The only question now is when that hard landing will happen. Right now today everything is normal and 95%+ of the public still have their eyes shut. And it will likely stay that way for a while as the financial/economic foundation quietly crumbles.
Maybe in a couple months or as late as maybe early next year is my wild guess.
There is no fixing that now. As they have been talking about , it will be a hard landing. Doesn't matter what the Fed does with interest rates now at this point.
The only question now is when that hard landing will happen. Right now today everything is normal and 95%+ of the public still have their eyes shut. And it will likely stay that way for a while as the financial/economic foundation quietly crumbles.
Maybe in a couple months or as late as maybe early next year is my wild guess.
I was perusing the last 10-k filing of my small regional bank. 6 billion in assets under management. We had gotten the email of the "safe and stable" nature.
Interestingly in 2021 they had 132 million in unrealized gains. 2022? 800 million dollar LOSS. And they are holding 1.6 billion of mortgage backed securities.
Its fine. No problems to see here. Until there is
Interestingly in 2021 they had 132 million in unrealized gains. 2022? 800 million dollar LOSS. And they are holding 1.6 billion of mortgage backed securities.
Its fine. No problems to see here. Until there is
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RT 1:16:10
bw
Fringe Ranger
And as was thoroughly discussed all along the way, we knew that zero interest was fatal. It was a seductive move with no way out. Grumble grumble.
nadhob
Veteran Member
psychgirl
Has No Life - Lives on TB
Yes. At least
SouthernBreeze
Has No Life - Lives on TB
Mine, too. It has at least doubled.
Echo 5
Funniest guy on TB2K
This would be about 12% of Switzerland's GDP and represents a new level of absolute insanity.
View: https://twitter.com/gurgavin/status/1637498789698191362
View: https://twitter.com/gurgavin/status/1637498789698191362
somewherepress
Has No Life - Lives on TB
View: https://twitter.com/CGasparino/status/1637499925310185475
Charles Gasparino
@CGasparino
SCOOP: Banking regulators have been given evidence as many as 25 mid sized banks must be merged/face elimination because of balance sheet issues. Large banks
@jpmorgan
would be natural buyers if govt relaxes deposit limits. By contrast 1200 banks went away during thrift crisis
12:03 PM · Mar 19, 2023
Charles Gasparino
@CGasparino
SCOOP: Banking regulators have been given evidence as many as 25 mid sized banks must be merged/face elimination because of balance sheet issues. Large banks
@jpmorgan
would be natural buyers if govt relaxes deposit limits. By contrast 1200 banks went away during thrift crisis
12:03 PM · Mar 19, 2023
bw
Fringe Ranger
This was the calm-the-herd number to say that we have a real but manageable situation here. Don't you worry your pretty little head, we're on top of it. What the REAL situation is will become clear in the course of time. This feels big, really big.
somewherepress
Has No Life - Lives on TB
View: https://twitter.com/zerohedge/status/1637502219359584256
SUNDAY, MAR 19, 2023 - 12:11 PM
Update (1300ET): The Financial Times reports that UBS has agreed to buy Credit Suisse after increasing its offer to more than $2bn, with Swiss authorities poised to change the country’s laws to bypass a shareholder vote on the transaction as they rush to finalize a deal before Monday.
That is a fraction of the $8 billion market cap the company was valued at on Friday's close...
UBS shareholders are not happy.
As FT notes, Vincent Kaufmann, chief executive of Ethos Foundation, which represents Swiss pension funds that own between 3 per cent and 5 per cent of Credit Suisse and UBS, told the Financial Times that the move to bypass a shareholder vote on the deal was poor corporate governance.
Using UBS to save Credit Suisse marks a turnaround from nearly 15 years ago, when Switzerland bailed out UBS after it got stuck with billions of toxic assets in its U.S. business. Credit Suisse declined state aid at the time and emerged from the crisis in stronger shape.
* * *
Update (10:30am ET): So much for Credit Suisse thinking it has leverage by balking at the proposed CHF0.25 offer from UBS. Just hours after it was floated that UBS could buy Credit Suisse for $1BN, a proposal which the bank's shareholders balked at, Bloomberg reported that authorities are now considering a full or partial nationalization of Credit Suisse - an outcome which would wipe out the equity and bail-in bondholders - as the only other viable option outside a UBS Group AG takeover. And yes, 0.25 is still more than 0.0.
According to BBG, "the country is considering either taking over the bank in full or holding a significant equity stake if a takeover by UBS Group AG falls apart because of the complexities in arranging the deal and the short time frame involved."
Needless to say, the situation remains "very fluid" and is changing by the hour as authorities seek to finalize a solution for the bank by the time Asian markets open, which is late evening in Europe, the people said.
* * *
Earlier
With just hours left until futures reopen for trading in what could be a very turbulent session, UBS has offered to buy Credit Suisse for up to $1BN the FT first reported, with Swiss authorities planning to change the country’s laws to bypass a shareholder vote on the transaction as they rush to finalize the deal engineered to restore trust in the banking system.
Photo: Getty Images
The take-under offer was communicated on Sunday morning with a price of CHF0.25 a share to be paid in UBS stock, far below Credit Suisse’s closing price of CHF1.86 on Friday. And while the current terms value Credit Suisse’s equity at a paltry $1BN, the figure does not reflect additional provisions of around $6 billion from the Swiss National Bank to ensure the deal is done.
In other words, UBS gets an explicit $6BN central bank backstop (which would mean the central bank is in for a penny, in for a trillion), pays $1BN and gets a megabank whose Zurich headquarters alone is probably worth more. One can see whyJPMorgan, pardon UBS would love the deal... and why Credit Suisse would be less than enthused.
The all-share deal between the two biggest Swiss banks is set to be signed as soon as Sunday evening and will be priced at a fraction of Credit Suisse’s closing price on Friday, all but wiping out the target’s shareholders, FT sources said. They also noted that in an unexpected twist, there will be a very unique material adverse exit clause: if UBS credit default spreads jump by 100 basis points or more, the deal is off! In other words, if the market balks at the pro forma deal and believes more contagion is coming, UBS wants none of it, and the Swiss government and SNB can deal with the fallout.
Needless to say, Credit Suisse shareholders - led by the Saudi National Commercial Bank, a full list of the top 40 is shown below - were less then enthused by the prospect of losing everything ...
... and Bloomberg notes that Credit Suisse is pushing back on the proposed deal with backing from its biggest shareholder: "Credit Suisse believes the offer is too low and would hurt shareholders and employees who have deferred stock."
The FT echoes the skepticism, and says that the situation is fast-moving and there is no guarantee that terms will remain the same or that a deal will be reached: "Some of the people said that the current terms were unfair for Credit Suisse and its shareholders. Others criticised the plans to void normal corporate governance rules by preventing a UBS shareholder vote."
The reason why in this late hours there seems to be little convergence toward a consensus is because there has been limited contact between the two banks and the terms have been heavily influenced by the Swiss National Bank and regulator Finma, the FT sources said. Meanwhile, the Federal Reserve has given its assent to the deal progressing.
Both sides have been locked in discussions with regulators since Wednesday, when Credit Suisse asked the SNB to provide it with an emergency SFr50bn ($54bn) credit line. When this backstop failed to halt the collapse in depositor confidence and stock price - as we said it would - the central bank stepped in to force a merger after becoming concerned about the viability of the country’s second-largest lender. Yesterday, we learned that deposit outflows from Credit Suisse topped SFr10bn a day late last week, after a record bank run pulled CHF111BN from the group in the final three months of last year.
According to the FT, on Saturday night, the Swiss cabinet assembled in the finance ministry in Bern for a series of presentations from government officials, the SNB, market regulator Finma, and representatives of the banking sector.
UBS will dramatically shrink Credit Suisse’s investment bank, with Reuters reporting that some 10,000 workers will be let go, and the combined entity will make up no more than a third of the merged group, two of the people said. However, the current term sheet for the deal does not specify what will happen to Credit Suisse’s individual business divisions, and simply outlines a 100% takeover of the group.
The government is preparing emergency measures to fast-track the takeover and plans to introduce legislation that will bypass the normal six-week consultation period required for UBS shareholders so the deal can be sealed immediately. The framework of the deal has been designed by Swiss regulators to provide maximum stability to the country’s banking system, people briefed about the matter said.
However, if Credit Suisse balks at the takeunder - as it perhaps should and takes its chances in bankruptcy court where its equity may be valued higher than the paltry 0.25 - the Swiss National Bank, and all other central banks, will have no choice but to step with a shotgun bailout of the entire financial system for the second time in 15 years.
UBS To Buy CS For $2 Billion; SNB Offers $100 Billion Liquidity, Authorities Force Bypass Shareholder Vote
BY TYLER DURDENSUNDAY, MAR 19, 2023 - 12:11 PM
Update (1300ET): The Financial Times reports that UBS has agreed to buy Credit Suisse after increasing its offer to more than $2bn, with Swiss authorities poised to change the country’s laws to bypass a shareholder vote on the transaction as they rush to finalize a deal before Monday.
That is a fraction of the $8 billion market cap the company was valued at on Friday's close...
UBS shareholders are not happy.
As FT notes, Vincent Kaufmann, chief executive of Ethos Foundation, which represents Swiss pension funds that own between 3 per cent and 5 per cent of Credit Suisse and UBS, told the Financial Times that the move to bypass a shareholder vote on the deal was poor corporate governance.
Finally, The Wall Street Journal reports that, in an effort to smooth the deal, the Swiss National Bank has offered UBS around $100 billion in liquidity to help it take on Credit Suisse’s operations, according to the people familiar with the matter. Details of the liquidity offer couldn’t be learned.
Using UBS to save Credit Suisse marks a turnaround from nearly 15 years ago, when Switzerland bailed out UBS after it got stuck with billions of toxic assets in its U.S. business. Credit Suisse declined state aid at the time and emerged from the crisis in stronger shape.
* * *
Update (10:30am ET): So much for Credit Suisse thinking it has leverage by balking at the proposed CHF0.25 offer from UBS. Just hours after it was floated that UBS could buy Credit Suisse for $1BN, a proposal which the bank's shareholders balked at, Bloomberg reported that authorities are now considering a full or partial nationalization of Credit Suisse - an outcome which would wipe out the equity and bail-in bondholders - as the only other viable option outside a UBS Group AG takeover. And yes, 0.25 is still more than 0.0.
According to BBG, "the country is considering either taking over the bank in full or holding a significant equity stake if a takeover by UBS Group AG falls apart because of the complexities in arranging the deal and the short time frame involved."
Needless to say, the situation remains "very fluid" and is changing by the hour as authorities seek to finalize a solution for the bank by the time Asian markets open, which is late evening in Europe, the people said.
* * *
Earlier
With just hours left until futures reopen for trading in what could be a very turbulent session, UBS has offered to buy Credit Suisse for up to $1BN the FT first reported, with Swiss authorities planning to change the country’s laws to bypass a shareholder vote on the transaction as they rush to finalize the deal engineered to restore trust in the banking system.
Photo: Getty ImagesThe take-under offer was communicated on Sunday morning with a price of CHF0.25 a share to be paid in UBS stock, far below Credit Suisse’s closing price of CHF1.86 on Friday. And while the current terms value Credit Suisse’s equity at a paltry $1BN, the figure does not reflect additional provisions of around $6 billion from the Swiss National Bank to ensure the deal is done.
In other words, UBS gets an explicit $6BN central bank backstop (which would mean the central bank is in for a penny, in for a trillion), pays $1BN and gets a megabank whose Zurich headquarters alone is probably worth more. One can see why
The all-share deal between the two biggest Swiss banks is set to be signed as soon as Sunday evening and will be priced at a fraction of Credit Suisse’s closing price on Friday, all but wiping out the target’s shareholders, FT sources said. They also noted that in an unexpected twist, there will be a very unique material adverse exit clause: if UBS credit default spreads jump by 100 basis points or more, the deal is off! In other words, if the market balks at the pro forma deal and believes more contagion is coming, UBS wants none of it, and the Swiss government and SNB can deal with the fallout.
Needless to say, Credit Suisse shareholders - led by the Saudi National Commercial Bank, a full list of the top 40 is shown below - were less then enthused by the prospect of losing everything ...
... and Bloomberg notes that Credit Suisse is pushing back on the proposed deal with backing from its biggest shareholder: "Credit Suisse believes the offer is too low and would hurt shareholders and employees who have deferred stock."
The FT echoes the skepticism, and says that the situation is fast-moving and there is no guarantee that terms will remain the same or that a deal will be reached: "Some of the people said that the current terms were unfair for Credit Suisse and its shareholders. Others criticised the plans to void normal corporate governance rules by preventing a UBS shareholder vote."
The reason why in this late hours there seems to be little convergence toward a consensus is because there has been limited contact between the two banks and the terms have been heavily influenced by the Swiss National Bank and regulator Finma, the FT sources said. Meanwhile, the Federal Reserve has given its assent to the deal progressing.
Both sides have been locked in discussions with regulators since Wednesday, when Credit Suisse asked the SNB to provide it with an emergency SFr50bn ($54bn) credit line. When this backstop failed to halt the collapse in depositor confidence and stock price - as we said it would - the central bank stepped in to force a merger after becoming concerned about the viability of the country’s second-largest lender. Yesterday, we learned that deposit outflows from Credit Suisse topped SFr10bn a day late last week, after a record bank run pulled CHF111BN from the group in the final three months of last year.
According to the FT, on Saturday night, the Swiss cabinet assembled in the finance ministry in Bern for a series of presentations from government officials, the SNB, market regulator Finma, and representatives of the banking sector.
UBS will dramatically shrink Credit Suisse’s investment bank, with Reuters reporting that some 10,000 workers will be let go, and the combined entity will make up no more than a third of the merged group, two of the people said. However, the current term sheet for the deal does not specify what will happen to Credit Suisse’s individual business divisions, and simply outlines a 100% takeover of the group.
The government is preparing emergency measures to fast-track the takeover and plans to introduce legislation that will bypass the normal six-week consultation period required for UBS shareholders so the deal can be sealed immediately. The framework of the deal has been designed by Swiss regulators to provide maximum stability to the country’s banking system, people briefed about the matter said.
However, if Credit Suisse balks at the takeunder - as it perhaps should and takes its chances in bankruptcy court where its equity may be valued higher than the paltry 0.25 - the Swiss National Bank, and all other central banks, will have no choice but to step with a shotgun bailout of the entire financial system for the second time in 15 years.
SmithJ
Veteran Member
UBS to Buy Credit Suisse in Historic Deal to End Crisis
- UBS to pay more than $2 billion in government brokered deal
- Switzerland pushed for a solution after a crisis of confidence
psychgirl
Has No Life - Lives on TB
What does that mean?
nadhob
Veteran Member
Fox News was reporting over 200 banks are already in trouble. Over $500 billion has already been drawn down from the Fed, the discount window, and the newest rescue op treasury initiated last week after the SVB and SIG failures. $500 billion in one week!!! Again, there's never just one cockroach...
The Hammer
Has No Life - Lives on TB
Might have to get some plant-based "meat" for a few of our burgers. All this ground beef is getting expensive...
bw
Fringe Ranger
I don't know the numbers of banks or how many are on the brink. But it feels like we'll see a banking holiday in the near future. Be prepared to hunker down while the elephants stampede.
Henry Bowman
Veteran Member
Bubble Head
Has No Life - Lives on TB
Good question. I think it means a lot of people took a real shaving.
Henry Bowman
Veteran Member
So will we have an honest to goodness Deathburger thread tonight? Ya know, Photos and everything ?
It could be sheer chaos tonight...Groucho and /or Hammer might even play THAT song...they do not care what day of the week it is.
It could be sheer chaos tonight...Groucho and /or Hammer might even play THAT song...they do not care what day of the week it is.
psychgirl
Has No Life - Lives on TB
I think you’ve all convinced me.
I’ve been trying to hold off doing the withdrawal thing.
Henry Bowman
Veteran Member
You can always put it back in if you need to...but if you need to and dont you may not be able to take it out.I think you’ve all convinced me.
I’ve been trying to hold off doing the withdrawal thing.
Best to panic early and avoid the rush
The Hammer
Has No Life - Lives on TB
Nah, we wouldn't spoil the sacredness of that song.
Though we have been holding back certain pictures for when the markets really get interesting...
Henry Bowman
Veteran Member
Yes....margins have been a bit thin ...hmmm....what to do, what to do?
Dollar Short
Veteran Member
First it was ground beef, next came plant-based 'meat', to be followed by insects, lastly will come Soylent Green...
Profit of Doom
Dismember
Well, it ain’t a double rainbow.
It means that the Swiss National Bank is going to:
1. Allow UBS to buy it for .50 per share.
2. Shareholders don't get to vote on it. You lose 75% of the value of your stock holding.
3. UBS provides a 100 billion dollar line of equity to support the deal (which UBS is paying 2 Billion). Wrap your head around it. They give them 100 billion to spend 2 billion. They expect a collapse of the 1.4 trillion in assets of CS even after the transfer.
4. If the credit default swaps, "insurance" rise too much the deal is off.
5. The initial plan was a "bail in". Bond holders get wiped out. The bonds are worth zero. Some may have convertible bonds which would be converted to stock which would drive the price down further, basically giving pennies on the dollar to those lucky few and nothing to the rest.
6. Holders of CS equity and bonds are going to have massive losses. That will cascade to other entities who now have to write down those holdings, who will fail and keeping the ball rolling.
7. Note the post above with reports that 25 mid sized banks need to be "acquired" by bigger banks. That number is closer to 300. Note also that yesterday 119 banks asked the FDIC to ensure everything for the next 2 years because their depositors are running to the too big to fail banks. We are in the top of the first inning here folks.
Groucho
Has No Life - Lives on TB
I may have read it long ago, but I've thought it wise to keep enough "cash" on hand to handle a couple of months worth of normal spending. That way if banks and electronics weren't working correctly for a time, I can keep things covered. These glitches can be anything from rough weather like California is having right now, to earthquakes and other natural disasters right up to bank holidays and failures.I think you’ve all convinced me.
I’ve been trying to hold off doing the withdrawal thing.
I realize that everybody can't put that kind of money aside. Life's like that. As I told our kids when they were young, "Do the best you can."
Tristan
Has No Life - Lives on TB
What do you get when you subsidize something?
More of it.
Till you can't subsidize it any more.
:smh:
Greenspode
Veteran Member
Nice, concise summary of the situation. Thank you!
SouthernBreeze
Has No Life - Lives on TB
Just out of curiosity, what are members here who have several thousand dollars in checking and savings accounts doing in light of this current crisis? If it's too personal, don't answer. I'm just curious.
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