Too big to fail regulations obviously didn’t work and there’s no guarantee that any regulation or equity requirement would prevent a bank’s bankruptcy anyway.
Having only one large bank for the Swiss economy is a big risk imo.
Shouldn’t the new UBS-CS mega bank be split into like three separate banks?
I am not so sure about it: today’s deal locates the capital at ~3 Billion CHF, but conditional to a wipe-out of ~16 Billion in bonds.
So it would mark the estimate for today morning’s value of CS’ capital at -13 Billion, wouldn’t it?
The issue highlighted by auditors and SEC last week was “risk assessment process to identify and analyze the risk of material misstatements in its consolidated financial statements”.
It means the process to prepare the financial statements was weak, but it does not say that there was an actual material misstatement. It does not say there was an issue in risk control outside of the financial statements either.
I really hope the issue PWC found was a meaty one and they were not just acting in CYA (Cover Your Ass) mode. Otherwise they have contributed to wiping out the shareholders and creditors they are supposed to have been protecting.
I doubt the government was looking at it in that way. They only care about putting on a face of stability and trying to prevent the entire swiss banking system from going into turmoil on Monday morning (while also politically trying to make it look like its not a massive bailout at the taxpayers expense).
The government won’t have any more clue than the public markets who valued it at CHF8bn on Friday. The Friday valuation also included the risk premium of it fully collapsing on the weekend and is the price of all future discounted cash flows so wouldn’t even map 1:1 to the question of its current insolvency.
In the end, the company had ~CHF1.5tn of hugely complex exposures which get repriced every day and have been repriced heavily with all the macro events of late. Right now no one knows (not even UBS) whether they got a good deal or not.
Hummm. You mean credit derivatives, CDOs, leveraged this and that, and the like? Sounds promising!
But maybe 200bn will 
…
This is my read of the story so far, I’ll be glad if I can be corrected or information that I missed is provided. Please note that these are hypotheses, the known naked facts have been stated in previous messages.
CS couldn’t be presented as insolvent, whether because they indeed were not, it couldn’t be assessed if they were or stating that they were would have created panic the swiss regulators wanted to avoid.
As such, shareholders couldn’t be wiped out. UBS assessed the value of the company was no more than CHF 1B.
CS’ board had to show they did put up a fight on behalf of their shareholders so they refused the 1st deal.
UBS agreed to raise its price but made it contingent on the 16B in AT1 bonds debt being written off and the 9B guarantee to cover potential losses since it didn’t have time to properly assess the value of their acquisition.
Regulators fought back to have UBS pay for the first 5B of losses before activating the guarantee.
Having a deal that allowed for the peaceful resolution of the issue and both boards being convinced they didn’t have a better option on the table, the Federal Council acted to bypass a shareholders’ vote.
The liquidity guarantee was going to be there from the start since that is what is perceived will most effectively calm the fears of the financial markets.
As a result, we don’t know the real value of CS (at least for now), we don’t know if it was net positive, was under or overvalued. Shareholders did get something but some may think they are being screwed over by the swiss authorities and may cling to the idea that the business was worth much more. Some bondholders got wiped out before shareholders.
I’m not sure I like the results of that one. It feels messy to me. We’ll have to see how it pans out.
What will happen with CS shares now? I guess they’ll plummet down to precisely 0.75chf and stay there until they’ll be exchanged for UBS shares?
I assume there will be still some volatility in the next weeks where they will trade for 1:22-1:25 of UBS stock price.
I was imagining that trading of CS shares will be frozen and after some time they will be exchanged to UBS shares.
I was obviously wrong, there is trading going on.
P.S. congratulations to all winners of HardturmstrasseBets! Vae victis!
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 
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).