The End of Credit Suisse!
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- Опубліковано 29 вер 2024
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After a weekend of intense negotiations, Swiss authorities brokered an emergency deal to sell Credit Suisse the troubled 167-year-old investment bank to its Swiss rival, UBS. A $54bil lifeline from the Swiss National Bank last week failed to stem the crisis facing Credit Suisse following Silicon Valley Bank’s collapse: its share price collapsed and the flight of deposits accelerated. The deal has prevented a globally important bank from failing.
Under the terms of the deal, Credit Suisse’s additional tier 1 (AT1) bonds were written down to zero while shareholders received $3.25bn. In today's video we discuss whether that is fair and who owned those bonds.
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MY GUY HAS SOME GOOD INFO BUT acts like a ROBOT ai DOES EXIST
Is there an ethics problem when they lie to people like that? Any recourse?
Expecting bankers to fix the banking system is like hiring the town's worst arsonist to be the fire chief.
Why no mention of Credit Suisse woke policies including his gender fluid CEO?
I love it, everything woke turns to shit.
I only signed up out of respect Sensi.
This is a terribly sad day, Patrick will no longer have opportunity to mock credit suisse future displays of incompetence. 😢
He'll have to switch to UBS.
Noooooo! Not credit suisse!
Dont worry, the shit show that is Deutsche still exists.
Don’t worry, human stupidity has no limits. Patrick will have plenty to mock in the future
An idiot is born every day, and patrick has a fantastic ability to find us the most entertaining. Have faith! Just remember: "Its going up because I am buying😂"
"This is no bailout !" the Swiss finance minister was quoted as saying at 11:06 . This is what we prefer to call: "A very large bilge pump." 😜
Thanks for the video Patrick !
This episode was another fine example of how chasing bond yields can be an excellent way to get the same risks as equity investments but with a nice cap on their potential for gains.
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really funny that bankers and VC bros are acting like interest rate risk management is an alien concept
Why not? If ypu know that biden and the Fed will bail you out, life is great. Keep on partying.
Professional investor: “What?? Zero? Who reads the fine print??”
What, Swiss insolvency law modified on a Sunday by emergency decree invoking war-time exceptional powers to allow wipeout of AT1!😂
@@gigikontra7023 Nope. The AT1 were wiped out exactly according to the terms in the AT1 contracts. What was done in emergency fashion on Sunday was forcing a takeover without allowing a stockholder vote by either bank.
@@scottcameronpedigo219 read the docs, man, then come and talk to me. Thanks
It's a tragic day indeed,
We've just witnessed the death of a financial meme.
R.I.P. Credit Suisse 1856-2023 †
Never knew about 'AT1' bonds, they never mature, but pay a substantial yield, and can be written down by regulators for a variety of reasons. Talk about High Risk bonds
3 things I want to say:
1. Thanks Johnny Sins of finance for this very well coverage of the Late Credit Suisse.
2. Anyone who goes pass CS office, please lay some flowers for them.
3. This time, CS AT1 holders are the sucker at the table.
cs Deserves No 💐
AT1 treatment seemed punitive and haphazard. This "protection" will need to be reworked.
Patrick's thoughts about Credit Suisse: "Oh no! Anyway..."
A minute of silence on the untimely demise of Debit Suisse... Thereby robbing Patrick of a lifetime of comedy material 😂
The fact that shareholders couldn't vote on the transaction is clearly an issue in principle and does not reflect well on Switzerland. But in practice it doesn't matter: CS had no other option anyway and would probably have gone bust otherwise, and UBS shareholders would have voted in favor of a deal that is very good for them. As for the AT1 bondholders, no reason to feel sorry. The terms and conditions of these bonds, from what I understand, stipulated that such an outcome was possible. And frankly, if you bought CS bonds yielding over 9% at issuance, you should have expected that there was a substantial risk in such an investment.
My parents (not domiciled in Switerland which is CS's home base) both had CS accounts a few years ago with about $US 400,000 combined funds in them. A CS rep' came all the way from Switzerland to discuss with them and dozens of other CS account holders in my country that unless they had $US 1 million in their accounts, CS were going to have to close all these accounts. Their accounts were very soon closed. Thousands of offshore CS clients had their accounts closed because they had less than $US 1 million in them!! Well CS you are a bunch of muppets without a doubt. You shat on thousands of your clients and karma has come back to shat on you.
But of course. Credit Suisse doesn’t want to launder money for just anybody, they want the whales :P
As Patrick mentioned in other video, dealing with US customers is very costly for any bank in the world.
I've learned two things from the comments of this video in the last three weeks. One, people will rag on others for making the wrong financial choices like they're the second coming of christ in the financial system. Two, these same people cannot form a complete, readable sentence. They seem to think there's a small character limit for UA-cam comment sections or something. It's truly spectacular.
Hey Patrick! Video rocks, thank you.
Watching this, and thinking about SVB and Credit Suisse over the last few weeks has me wondering… How common is it for huge swaths of value, or debt, to disappear, or get wiped out in transactions like this? Specifically in situations where there was some… incompetence…. In the risk management department?
My background is in fraud, waste, and abuse, and a large amount of money going up in smoke in times of financial distress usually flags something for us when we are investigating a company.
But I don’t know a lot about banks! so I’m asking you 😅
This question was, I believe, mentioned in this video. Anyway the short answer is....
*CREDIT SUISSE EMPLOYEE BONUSES TIED TO AT1 BONDS ALSO WIPED OUT
Just on the news now
Thank you for adding an articulate voice to this banking mess.
it is not the end, the Swiss division must continue to operate as an independent bank. This is mandatory, it will call Kreditanstalt
This guy Patrick is a legend! So objective and precise and all inclusive!
I really wish they would eliminate the term “too big to fail”. Clearly as we have seen in 2008 and now, they obviously can and do fail. It lends credence to- “the bigger they are, the harder they fall”.
Interesting filter/lighting choice. A suitably somber - dare I say séance-like - mood.
Great video Patrick, would love a video on the OTC derivative market. Cheers
I don't know about the claim that UBS will have a near monopoly in Switzerland. Almost every canton has their own cantonal bank, and there are plenty of other small to mid-sized banks to choose from. Most people I know have their main bank accounts at one of these cantonal banks
11:25 Axel Lehmann, the chair of Credit Suisse... you can't make this shit up...
Credit Suisse calling Deutsche Bank brings to mind the tale of the lame yelling at the deaf to hurry up...
14:00 Toblerones aren't what they used to be. They've been spreading the peaks apart, meaning you get more air and less choccy. No doubt the Germans have a word for this, and no doubt it's long. Talpreishochsetzenmittelstoff, or something.
Of course Germans have a word for it: Zinnenabstandsverbreiterungschokoladenschwund.
First I couldn't believe it. But it's mad how CS smashed its own legacy against the wall, time and time again.
In terms of the domestic Swiss market it's not the monopoly it might appear as there are also the Cantonal regional banks plus Raifeisen and Baer in the top 10.
SNB is hiring more shovel operators to put dollars,euros,pounds,yuan¥ into the
dumpster fire,faster.
Thank you for making these videos...
So, what incentives exist for banks to not engage in the exact behavior of Credit Suisse going forward? What incentives exist for people to not bank at places engaging in the exact behavior of Credit Suisse?
The help came from the Nationalbank and NOT from the swiss government. No tax money is involved.
Ultimately, Swiss National Bank get its money from the Swiss public
@@NICK-uy3nl you have no clue how money is implemented.
Of course as a anglo saxon you are not able to separate government, central bank and tax payers, the king and the deep state. 🙈
Probably what is almost just as worrying is the Swiss Government and the regulator FINMA were too quick to change rules and regulations.
Thank you, Patrick. Each of your videos is highly informative, and often highly entertaining (this one might be the exception, except for a few droll comments you cleverly worked in. Your analyses are always clear, comprehensive and superb..
Sadly Credit Suisse demise leaves Patric without easy content. I hope Soft Bank will step in to fill the gap
Didn't the first TARP money bail them out in 2008?
How can a country about the size of Kentucky, with just slightly more population than the Dallas-Ft Worth metro area, have banks with such important financial status as Switzerland does? Is there something about Swiss banks that I don't know? What was Patrick referring to when he mentioned 'scandals'? Does Russia have something to do with this? I'm confused.
I find it entertaining, how many of Credit Suisse employees on LinkedIn, went from showing off that they work there, to changing their profile’s settings, from public visibility, to private visibility, including their activity.
Just remember kids; financial “geniuses” are not smart, they just have access to low interest rate financing.
Once the financing isn’t available, all of a sudden these “geniuses” have only one answer; we need a bailout.
It’s not a bailout! It’s just the Swiss government changing the laws, dictating terms and providing a ~$100 billion credit line.
0:43 bottom right corner.. 👀
😂
The word combination Credit + Suisse tells me all i need know
It is not a bail out but USB received a 100billion CHF and indemnity from law suits from anything they acquire from credit Suisse
Walks like a duck, quacks like a duck...
@3:39 why do i hear a dinosaur roar?..
Haha wtf IS THAT?
Excellent summary and insights.
Where does all of this money go? The billions in losses on portfolios and then the cash or credit infusions in the billions. Does it just wash out at the end and the investors/holders lose?
Really like your content, thanks for sharing !!
They were collecting 9.5% coupon on the bonds? They knew what they were getting in to.
Very comprehensive analysis, 👍
Goddammit, now I'm craving a Toblerone.
Excellent video. Maybe the best online which explains the situation in Credit Suisse scandal. I would say it is not bankrupt but bankrupted by some unknown forces (!)
The finest "free market" can offer...
Anyone else notice swiss regulators came in on a saturday?
I can't believe Patrick bullied them into bankruptcy.
Patrick Boyle cancels Credit Suisse 😂
All they deserved. xaxa
I can
We can only imagine how joyful and enthusiastic are UBS employees now they're looking in Credit suisse books and finding the wonderful legacy they'll have to manage in the next few months to save their own job.
a fate worse then death
UBS employees didn't have to go over the books on their own. It was implied that through the transition phase CS employes would have to tie up loose ends to earn their severance packs. That and writing resumees. As an independent contractor I barely escaped alive. The hedge elders suposedly became coffee boys at Julius Bear.
"Here is a chart of these bonds. They went to zero." Hahahha
Wow, I didn't realize that there are people on UA-cam who discuss finance at this level and with such clarity at the same time.
Thanks for the entertaining and insightful video 👍
That level of professionalism is to be expected from Patrick. Do yourself a favor and watch his ENTIRE channel - it’s an encyclopedia of financial knowledge, told in a smart, funny and engaging way ❤
I bet Patrick has known this video has been coming for a while
The research has been done and he was just waiting for articles to come out just to be sure.
Considering how badly he shit on credit suisse last video he might’ve actually helped their demise lol😂
@Michael that's a shade harsh
Everybody knows CS is having problems for many years. Not just them but UBS is the same, but CS is incredible worse.... even the CEO was the laughting stock of the banking community.
Amazing commentary as always with a generous dose of sarcasm. Does Patrick use a teleprompter? His delivery is articulate, friction free and relaxed at all times.
He does, you can tell by his eyes when he records videos closer to the camera. I assume Boyle is the type of guy to delete a video if he discovered a mistake, so he plays it safe which I appreciate.
Yes he does, he mentioned it before.
This is definitely my favourite AI generated character.
Was looking for this comment…
Your fucking rude ..imbecile
With ironically and undoubtedly more heart, wit and knowledge than a lot of extreme creeps like chamath
💀
Saves time for him I guess - put the doppelgänger’s to work
Any bank deemed too big to fail should immediately be broken up.
reminds me of McDonnell Douglas/Boeing deal, where the people who ruined McDonnell then inserted themselves into Boeing and then ruined that. IMO UBS just poisoned themselves.
I would agree. This will end badly and the country will be forced into an even larger bailout.
Now the same clowns are ruining Washington with corporate lobbying.
That aged like Fine wine, which is terrible!
As a brand new UBS share holder, I’ve got a 50% haircut to recoup. Let’s go UBS, there’s an entire world full of shifty financial deals to be made. 😜
… and I expect my Toblerone.
It’s a hell of a lot more than a 50% haircut, right? Like at least 80%
As a bond holder my haircut was 100%
@@benchoflemons398 - I got in for under two bucks a share.
@@mastercommander4535 sounds like a beheading more than a haircut lol
Excellent video Patrick. As an experienced Swiss banker living in Switzerland I found your message comprehensive, well balanced, and I learned the fundamental reason why AT1 bond holders could be treated worse than equity holders. As I don’t invest in this type of instruments I didn’t take the time to go analyse the question but you clarified for me a central legal question. Thank you.
Lmao, i cant get over how happy Patrick looks in the Thumbnail Next to the text "The end of Credit Suisse!"
I seriously love the idea of the AT1 bonds being paid to high-level execs instead of most of the cash.
Maybe give them a 10 year maturity instead of 5 and you've got the perfect motivator to run the bank well in the long run - run the bank well and you'll get solid interest payments AND the principal eventually.
Run it into the ground and the most you can get is a couple year's worth of interest payments.
This!!!! Yes, this is EXACTLY what is needed. ALL bonuses paid with AT1 bonds. But then, of course, all regulators and all AT1 bonds should be treated exactly as they were now.
On the flip side AT1 does pay a high yield like 9%
You would probably not get good management. They want secure incomes too.
@@sblijheid bonds like this do provide a secure income for management provided they do their job properly
@@sblijheid They can sell the bonds, as I understand it.
Patrick is having a field day with this one look at that thumbnail lmao
As always, I had been looking forward to this video on the shotgun marriage of UBS and CS. It is by far the most informative of any I've read or watched, especially the CS AT1 bond, which no other financial media has detailed as Patrick does. When you get close to 10% of annual return on a bond, you have no excuse to complain when you are wiped out as you chose to ignore the prospectus.
The bondholders should be expected to be wiped out in such circumstances, but it was the decision in this case to wipe out the bondholders while not wiping out the shareholders that was controversial.
@@Jim-Tuner I really don't get it why... The Shereholders got screwed as well, the bank was spelled by a fraction of it's value, they lost money just not all of it like bondholders. And I can see why, the bondholders where receiving 10% a yr exactly because of the risk, while shareholders expect that the bank would grow, they both got it wrong, but at the end the bank was still valued 3bn (money that goes to the Shareholders) while the bond got downed to zero (exactly what they are made for)
@@GameplayerCanal I think in retrospect the objection was calling what in reality were structured products "bonds". They never really met the definition of what a bond is and should not have been marketed as such.
Words should mean things. And what was sold here was in no sense bonds.
People buy high-yield bonds all the time and there is a general understanding of how those risks work. These "bonds" were more like unsecured loans being made to the bank.
@@GameplayerCanal Yeah, 10% is veeery nice, and as such, it comes at a price
@@Jim-Tuner "These "bonds" were more like unsecured loans being made to the bank."
A not unreasonable perspective, but unsecured loans are generally senior to the stockholders. So these "bonds" are specifically the least secure investment, less secure than unsecured.
I know you had fun making this one lol. Now I’m waiting for Duetche Bank and SoftBank because of course they’re involved.
I'm waiting for the inevitable collapse of Binance. Maybe it will be around Halloween because there are so many skeletons in that closet.
@@Jordan-Ramses Really, How do you know? Please do let us in on your "skeletons in that closet" expertise
@@CaptainRon1913 because I'm not an idiot. It's obvious. It's an obvious ponzi scheme.
Indeed.
@@CaptainRon1913 "Aside from the latest CFTC lawsuit, Binance has been under investigation by the Department of Justice since 2018 for allegedly flouting U.S. compliance laws, anti-money-laundering rules, and sanctions."
I really enjoy Patrick's more humorous and yet accurate take on topics. The tone is way better than a years ago when he just explain things without the humor. I notice the change with humor when he started explaining FTX collapse.
Well you either laugh or cry when you hear of the largesse given to bankers.
Banking sandals will just not be the same without Credit Suisse
is soft bank still around?
Were Credit Suisse big into footwear?
Don't worry, there's plenty of other European and American banks to watch.
@@gerhard7323 There were a lot of crocks. Crocks of what I won't say.
Swiss Regulators have already stated all employees, incl management will get 0 due bonuses (cash included).
While I praise this, expect the best and brightest to be going elsewhere quickly.
I expect the Credit Suisse brand to become a retail banks and split off, along with other unwanted parts and the crown jewels to be brought into UBS proper.
Fun fact. Toblerone is not Swiss anymore and they have to remove the mountain with the bear from their boxes :)
Damn, another video? Patrick's posting frequency is bearish... if he starts posting every day the bottom is near. This is Patrick's ultimate recession hedge: The more things go to shit, the bigger this channel gets. Brilliant way to diversify... better than gold!
yes, it was a bit like watching monopoly. In the Swiss version there is the Paradeplatz. Who can buy this, usually wins the game.
Timely updates on a quickly developing banking crisis. Thank you!
Yes, but will ubs begin selling flip flops? The market won’t settle till we know this.
These AT1 bonds followed the universal rule that "risk is proportional to gain." Another universal rule that applied in this case: "Read the fine print." 😉 Great video.
"Switzerland needs to be aware of its responsibility beyond its own borders"....
I really don't know how to handle this statement
It's good business.
They have a responsibility to money launderers everywhere.
It sounds like something you would say in an election campaign and have all your brain dead constituents scream: "YEAH."
Is Kevin O'Leary about to start handling media for Credit Suisse execs?
It's not a bailout we needed to protect the public. = It's not a ransom but we had to save the children who were kidnapped.
that's actually a surprisingly good way of putting it lmao. It's fucked to cover the banks asses, but if you don't the financial fallout would be horrific
It's not a bailout, it's a bailin, it's all Swiss!?!
It pisses me off.
If any of us screw it, then we have to deal with it.
In contrast those woketards get all kind of help of mommy government through our taxes.
A bailout saves the company..... in this case the company no longer exists and was absorbed by a different company. In your shitty example the ransom would be to pay for a different child??? It is still a child, right? Makes no sense to call this one bailout when the company ceases to exist.
And don't get wrong, UBS is going down next.
Well, it is less of a bailout if shareholders and bondholders need to bleed. Thinking of bailouts as a binary option may utimately not be helpful.
The bond being wiped is fine in and of itself, given that's how it's written. A high yield high risk product is perfectly fine. I don't like that it's called bond though, as that's not what we typically consider bonds to be. This is somewhat mitigated by the fact that it's only available to institutional investors who can and should look beyond the name, but it's still a bad name.
Sometimes it's good to read the fine print (these specific AT1 bond contracts) before signing and not just assume they are like AT1 bonds elsewhere... before this information I was wondering how Swiss authorities can just do something like this (favor shareholders) but now makes sense if it's all in the contracts.
So you think it's ok? Because apparently the insolvency law was modified by war emergency powers on Sunday to allow this even to be called a PONV. Or is this not a thing?
So you think an “emergency use approval/agreement was awarded in error? Maybe based on fraudulent data? That has a familiar ring to it…😏💉💵
I remember studying in Geneva and passing by the Cornavin station every so often. Credit Suisse and UBS weren't across from each other but were located on opposite ends of the station.
I had to pick a bank account and UBS happened to have a deal for young people so I took it. I feel quite lucky making that decision but it will be shocking seeing CS disappear, and even then I am concerned about the potential UBS monopoly.
But it will be good for the cantonal banks. UBS has crazy charged so small and middle size companies might suffer. CS was more business friendly
Thanks for the explanation on why the bondholders got wiped out. I was wondering how it was legal and what the purpose was, and you answered both questions handily!
Goodbye Debit Suisse, we shall not mourn your passing.
I bet UBS & Credit Suisse were peaking through the blinds at each other. 👀
Same happened here(India) with AT-1 Bonds of Yes Bank.
When did this happen?
@@Confucius_Says... 4 years ago.
The problem with regulators is they claim people should trust them while simultaneously claiming they have to lie to people for the greater good.
Come on.. regulators are as transparent and open as they can be. But they are there, among other things, to help prevent disasters, and saying on Wednesday "if we don't arrange a forced wedding with UBS over the weekend, CS is cactus", that could have created an unmanageable disaster for everyone.
Their job is to walk the fine line between the truth and mass panic. Tell the people enough, but not so much that it triggers a snowball effect of a panicked population.
Never trust any gov organization
"People are smart, they could handle it."
"A person is smart. PEOPLE are dumb, panicky, dangerous animals, and you know that's right."
--Men In Black
@@paulgibbon5991 OMG, that was the quote I was looking for. I couldn't remember the movie it came from for sure.
Bond holders can partially recoup their losses by converting CS offices into luxury timeshares.
7:00 "He does have one of those $8 blue ticks though, so it's probably a legitimate offer"
Holy shit that was so dry and so funny
King's student, here. I really appreciate you taking the time and having the drive and initiative to post your video at about 2am, Professor. I am an undergrad' in Molecular Genetics, and your teachings are my toolkits and further inspiration to becoming competent in the financial world.
You get to have actual class with Patrick? I'm jealous lol.
There are finance related subjects along with something like molecular genetics? 🤨
@@putinski666 probably something like computational finance. I did a course in stochastic analysis of derivatives in my masters in physics.
@@retinapeg1846 I can still wrap my head around stochastics and physics. But my head just cannot mash together the OP's subjects lol. Would love to hear more about them.
Cringe
- Saudi: We're not gonna hold more than 10% stake. Nah CS will be fine & we're not saving them.
- (Regulators stepped in and forced a crazy deal.)
- Saudi: Wait wait wait that cannot happen!!! Don't accept that.
If the Saudi National Bank is unhappy - we all winners. I loved that they zeroed out the "cheater" bonds.
You live off of the PetroDollar.
Saudis give value to paper
Why is that? The Saudi investments are what are keeping many financial markets viable.
How the hell does that make anyone a winner when a government wipes bonds? It's a shitshow meaning we are going to get more government that will green lit this dumpster fire.
@@abdelrhmandameen2215 nothing to be proud of. Should have their own currency backed by oil.
Every bank that failed was born from "formal negotiations"... so, do financial authorities really think they can restore confidence in anybody younger than 50? I'm in my mid 30s and this is the second financial crises involving tax payer bailouts my adult life. I'm just glad I'm Canadian... oh wait, i do have some confidence in banking, too bad Canada is known as a "banana republic" for our draconian government powers that make such regulations. Edit: a rant does feel good😅
Truth! I'm 30. I have zero confidence I'll ever see a dime of social security. I cash out my retirement funds and take the penalty every time I leave a job. It's 10% today or 100% eventually. The currency will collapse long before I can retire.
@@michaelearlgrey lol im 25... i doubt ill ever be able to afford to leave my fathers guest house honestly.. 2 grand a month for an apartment.. our currency is worthless.. oh and 600$ for insurance cause i live near brampton (too close for the insurance companies anyways)
And yet there will be no tax payer money involved this time. But yes, Bitcoin was created for these situations.... and yet people still think it is a ponzi scheme.
I'd say that the group whose confidence they were aiming for was corporate depositors. And in that they seem to have a reasonable chance of success.
Banana republic? Whats wrong with our finance center.
first blink @ the 6m34s mark.
🤔🧲🤫
Excellent summary of the negotiations between the two banks. A lot of coffee and pizza kept people going,
This sounds eerily similar to the BoA acquisition of Merrill Edge.
did boa become the largest bank in the us after that? genuinely asking
at the very least, it wasn't a monopoly after
Patrick, you should have your editor go through your videos and make a compilation of all the Credit Suisse jokes you’ve made.
Yes!!!! As an "In memoriam"