The End of Credit Suisse!
by Patrick Boyle
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.
https://www.youtube.com/watch?v=hV0gpO1B6tU
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Re: Silicon Valley Bank Collapse
It probably has been mentioned before, but to Silicon Valley's credit, there did not seem to be any fraud, just the very poor decision to put too much money in low interest US Bonds. This does mean that the resources are mostly there to cover most of the creditors, and bank insurance covering the rest. There are not 'rafts and seas' of liar loan mortgages to deal with. There does seem to need to investigate whether cases of inside trading took place by bank owners who had knowledge of what suddenly happened.
Re: Silicon Valley Bank Collapse
The nation’s top financial regulator is asserting that Silicon Valley Bank’s own management was largely to blame for the bank’s failure earlier this month and says the Federal Reserve will review whether a 2018 law that weakened stricter bank rules also contributed to its collapse.
“SVB’s failure is a textbook case of mismanagement,” Michael Barr, the Fed’s vice chair for supervision, said in written testimony that will be delivered Tuesday at a hearing of the Senate Banking Committee.
Barr pointed to the bank’s “concentrated business model,” in which its customers were overwhelmingly venture capital and high-tech firms in Silicon Valley. He also contends that the bank failed to manage the risk of its bond holdings, which lost value as the Fed raised interest rates.
https://apnews.com/article/bank-failure ... 0159363026
“SVB’s failure is a textbook case of mismanagement,” Michael Barr, the Fed’s vice chair for supervision, said in written testimony that will be delivered Tuesday at a hearing of the Senate Banking Committee.
Barr pointed to the bank’s “concentrated business model,” in which its customers were overwhelmingly venture capital and high-tech firms in Silicon Valley. He also contends that the bank failed to manage the risk of its bond holdings, which lost value as the Fed raised interest rates.
https://apnews.com/article/bank-failure ... 0159363026
Re: Silicon Valley Bank Collapse
JPMorgan Chase says first-quarter profits rose 52%, helped by higher interest rates which allowed the bank to charge customers more for loans
https://abcnews.go.com/Business/wireSto ... l-98581870
JPMorgan grew deposits by $37 billion during the quarter, up to $2.4 trillion. Deposits at big banks had been falling for several quarters as consumers spent down their pandemic savings and businesses tapped into their stored cash to pay bills. But with the collapse of Silicon Valley Bank and Signature Bank in March, businesses have been withdrawing their funds from smaller banks and moving them into the larger banks, which are considered “too big to fail” and have an implicit government backstop.
https://abcnews.go.com/Business/wireSto ... l-98581870
JPMorgan grew deposits by $37 billion during the quarter, up to $2.4 trillion. Deposits at big banks had been falling for several quarters as consumers spent down their pandemic savings and businesses tapped into their stored cash to pay bills. But with the collapse of Silicon Valley Bank and Signature Bank in March, businesses have been withdrawing their funds from smaller banks and moving them into the larger banks, which are considered “too big to fail” and have an implicit government backstop.
Re: Silicon Valley Bank Collapse
Regulators continued their search for a solution to First Republic Bank’s woes over the weekend before stock markets were set to open Monday.
San Francisco-based First Republic has struggled since the collapse of Silicon Valley Bank and Signature Bank in early March, as investors and depositors have grown increasingly worried that the bank may not survive as an independent entity for much longer. The bank’s stock closed at $3.51 on Friday, a fraction of the roughly $170 a share it traded for a year ago.
First Republic has been seen as the most likely next bank to collapse due to its high amount of uninsured deposits and exposure to low interest rates.
https://apnews.com/article/first-republ ... 0d73894d4d
San Francisco-based First Republic has struggled since the collapse of Silicon Valley Bank and Signature Bank in early March, as investors and depositors have grown increasingly worried that the bank may not survive as an independent entity for much longer. The bank’s stock closed at $3.51 on Friday, a fraction of the roughly $170 a share it traded for a year ago.
First Republic has been seen as the most likely next bank to collapse due to its high amount of uninsured deposits and exposure to low interest rates.
https://apnews.com/article/first-republ ... 0d73894d4d