Bonds of all banks probably on a joy ride today. (Or the junior ones at least)
Very weird conclusion of the saga with bondholders being wiped and shareholders getting something in return.
However the conclusion for me is this: no point in throwing good money after bad.
It doesn’t matter if the company is well known, a shit company is a shit company.
Is this AT1 17bn to zero have any impact on who is using a 100% VIAC strategy only with CS as the fund provider?
What’s your view on all these CS funds?
Repeat three times before every meal:
Never invest in something you don’t understand.
Never catch falling knives.
only 5 days old, but this post aged really well I have to say
You need to ping @_MP if you want him to read you.
I was hoping this mess would have an effect on the USD/CHF change rate, so that I could sell my dollars for more CHF, but it does not seem to move much…
I know many people that work for CS. Most of them are currently shitting their pants. Everyone is wondering who will stay, what their job will be, how the salary will be affected etc.
For those like me who have the third pillar on finpension, which relies as we know on credit suisse, should they worry?
I don’t think so. I’m also on CS funds and I don’t care esp since pillar3a is long term.
The fund might change owner and be renamed, in the meantime it’s still the same afaik. If it gets closed you’ll get your investment back (I assume your pillar provider will just offer to transfer you to some equivalent fund).
The funds are not on the balance sheet of the custodian bank (CS). CS only manages them in a fiduciary capacity. Therefore, they do not fall under the bankruptcy estate of CS.
Correct. However, as CS is taken over in full by UBS, there is no significant bankruptcy risk anymore anyway (at least for the time being).
replying to the original question:
my title for this story would have been:
“Aktien-Casino-Zocker verliert Gelt mit Hochrisiko-Strategie”
I wouldn’t worry anymore. Since UBS bought CS with its liabilities, even potential failures from CS should be covered. Colm Kelleher, the chairman of UBS Group expressed an intent not to develop CS’s investment banking business but that part should either be sold to another bank, the funds kept or merged with UBS ones or liquidated, in which case the 3rd pillar and pension providers will get their assets back, find a new depository bank and offer new funds if the CS’ ones are discontinued.
In my opinion, the time to panic was last month. At this point, all we have to do is let things proceed, see what is offered and choose among the available options the one that best suits our needs.
Edit: full disclosure, I have moved my 3a funds to Swisscanto (Frankly.) last year.
With the government using emergency law to override shareholder opinions and anti-trust organisation, I also have a bad feeling about this temporary solution. Did the client money outflow stop? Has confidence been restored?
FuW mentions CHF 123 bn outflow in 2022 (not sure this was cash or assets under custody; Grossbank in Schieflage: Credit Suisse warnt vor Geldabfluss zu anderen Banken | Finanz und Wirtschaft). I somewhere got a figure of CHF 10 bn outflow per day last week (can’t find the source). Whatever liquidity is available (200bn), at 10bn per day it would last only 20 days.
Does anyone have any indication that trust hast been restored and outflow is reduced?
Something people (including journalists and politicians) repeat like a mantra is the Swiss deposit guarantee of CHF 100,000 per bank and person. Do you know this insurance is capped at CHF 8 bn (Änderungen ab 2023 | esisuisse)? So if a bank with - let’s say 1 million clients - fails, there will be only CHF 8,000 per person. Not very helpful to restore confidence in large banks…
… and at that point the government/snb will intervene. Maybe. Or maybe they’ll let the economy collapse.
Not directly related but I find reassuring that the Saudis seem to be swallowing the pill and are not (that I have found) openly challenging the deal:
That’s not how those are supposed to work tho. Banks still follow lots of regulation to make sure they are healthy, even if there’s a bank run (which is a trust issue, not an asset issue), the banks still has matching assets for the deposits (just with a duration mismatch because that’s what we asks of banks, borrow short and lend long). You just need a lender of last resort (e.g. central bank) or a merger/buyer to backstop this.
So esisuisse is somewhat irrelevant, it’s just to cover the short term liquidity funding, customers should still end up whole at the end (unlike stock and bondholders of the bank).
Not sure if we can assume this to be true every single time. A simple liquidity squeeze can push any company into default.
But if that’s not sufficient a central bank can always provide liquidity (using the collateral from the bank), if that’s not sufficient (like with CS), you’ll need to do something that restore trust further (merger/nationalization/bailout/etc.)
(and no “money” is created in the process, it’s balance sheets being moved around from commercial bank to central bank)