Home » Posts tagged 'credit suisse'

Tag Archives: credit suisse

The world was saved there briefly overnight after SNB’s giant liquidity shot into CS.

But it didn’t take long fort reality to sink in about the band-aid-like nature of this facility.

However, the situation under the hood may in fact be worse than some thought as Bloomberg reports, according to people familiar with the talks, that ECB Vice President Luis de Guindos told finance ministers on Tuesday that some European Union banks could be vulnerable to rising interest rates.

Guindos said that the ECB couldn’t rule out that some lenders might be at risk because of their business models, according to the people.

The market did not like that reality check with European IG credit spreads now above yesterday’s highs…

Guindos also cautioned not to be complacent and warned that a lack of confidence could trigger contagion.

Touching on a likely key theme of Thursday’s rate decision, Guindos highlighted the potential conflict between the ECB’s mission to bring down inflation and potential damage to some financial institutions from higher interest rates.

And after that headline on bank vulnerability, the odds of a 50bps hike today have tumbled…

What will Christine do?

Is the U.S. Banking System Safe?–15 Years Later

March 16, 2023

IS THE U.S. BANKING SYSTEM SAFE? – 15 YEARS LATER

“We’ve got strong financial institutions…Our markets are the envy of the world. They’re resilient, they’re…innovative, they’re flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong.” – Henry Paulson – 3/16/08

“I have full confidence in banking regulators to take appropriate actions in response and noted that the banking system remains resilient and regulators have effective tools to address this type of event. Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out . . . and the reforms that have been put in place means we are not going to do that again.” – Janet Yellen – 3/12/23

With the recent implosion of Silicon Valley Bank and Signature Bank, the largest bank failures since 2008, I had an overwhelming feeling of deja vu. I wrote the article Is the U.S. Banking System Safe on August 3, 2008 for the Seeking Alpha website, one month before the collapse of the global financial system. It was this article, among others, that caught the attention of documentary filmmaker Steve Bannon and convinced him he needed my perspective on the financial crisis for his film Generation Zero. Of course he was pretty unknown in 2009 (not so much anymore) , and I continue to be unknown in 2023.

The quotes above by the lying deceitful Wall Street controlled Treasury Secretaries are exactly 15 years apart, but are exactly the same. Their sole job is to keep the confidence game going and to protect their real constituents – the Wall Street bankers. And just as they did fifteen years ago, the powers that be once again used taxpayer funds to bailout reckless bankers. Two hours before the only solution the Feds know – print money and shovel it to the bankers – Michael Burry explained exactly what was about to happen.

…click on the above link to read the rest…

Credit Suisse Craters To Record Low After Revealing Staggering $88 Billion Bank Run

November 23, 2022

Credit Suisse Craters To Record Low After Revealing Staggering $88 Billion Bank Run

One month ago, weeks before the crypto sector was shaken by the crushing FTX bankrun which led to a quick and painful bankruptcy, and revealed that one of the world’s biggest crypto exchanges and its “JPMorgan-esque” owner were nothing but hollow shells of fraud, another bank was suffering from a far bigger bank run.

Readers will recall that in mid-October we reported that the Fed was quietly wiring over increasingly greater amount of dollars to the Swiss National Bank – which eventually peaked at around $11 billion weekly – which in turn was then using these dollar swap lines to plug funding holes within one or more Swiss commercial banks.

One didn’t need to be a rocket surgeon to figure out that the bank in question was Credit Suisse, which had seen its stock tumble amid a relentless barrage of scandals, corporate mistakes and the occasional fraud (that we know of), and which we said was likely suffering from a painful behind-the-scenes bank run.

Fast forward one month, when this morning the 2nd largest Swiss bank confirmed our worst-case speculation, admitting that it had just gone through a staggering bank run in which clients pulled as much as 84 billion Swiss francs, or $88.3 billion, of their money from the bank during the first few weeks of the quarter, underlining ongoing concerns over the bank’s restructuring efforts after years of scandals.

Of course, as FTX learned the hard way, bank runs don’t have a happy ending, and the Zurich-based bank warned on Wednesday that it will face a loss of up to 1.5 billion Swiss francs ($1.6 billion) for the three final months of the year, in large part as a result of the decline in wealth and asset management client funds from the start of October to Nov. 11…

…click on the above link to read the rest…

Sweden, Austria Start Bailing Out Energy Companies Triggering Europe’s “Minsky Moment”

September 3, 2022

Sweden, Austria Start Bailing Out Energy Companies Triggering Europe’s “Minsky Moment”

Last weekend, Credit Suisse repo guru published what may have been the most insightful snippet of the entire European energy crisis (to date) when he extended the infamous “Minsky Moment” framework to Europe, and specifically Germany, which he said “can’t cover its payments without Russian gas and the government is asking citizens to conserve energy to leave more for industry.” He then elaborated that “Minsky moments are triggered by excessive financial leverage, and in the context of supply chains, leverage means excessive operating leverage: in Germany, $2 trillion of value added depends on $20 billion of gas from Russia… …that’s 100-times leverage – much more than Lehman’s.” (Zoltan’s entire note is a must read for everyone with a passing interest in what comes next).

But while Germany still pretends it can somehow avoid a devastating crisis this winter besides bailing out Uniper, one of the country’s biggest utilities (after all, admission would make Trump’s 2018 warning accurate and prescient, and everyone knows that according to Western intellectual snobs Trump can’t possibly ever be correct), other European nations are succumbing to what Zoltan dubbed a “supply-chain Minsky moment.”

On Wednesday it was Austria, which announced it would bail out the country’s main energy supplier with a two-billion-euro ($2 billion) loan, the AFP reported. Chancellor Karl Nehammer said the loan to Wien Energie was an “extraordinary rescue measure” to ensure its two million customers – mainly Vienna households – continue to receive electricity. It will run until next April.

Wien Energie asked for a bailout this weekend after suffering financial trouble amid soaring energy prices and speculation the company mismanaged their funds. Nehammer said Wien Energie, which is owned by Vienna, would have to answer questions as to how they got into trouble.

…click on the above link to read the rest of the article…

$17.5 Million In Revenue And $5.4 Billion In Losses: Archegos Was A 300x-Levered Time Bomb For Credit Suisse

May 4, 2021

$17.5 Million In Revenue And $5.4 Billion In Losses: Archegos Was A 300x-Levered Time Bomb For Credit Suisse

A bank’s prime brokerage unit is supposed to be a safe, reliable and predictable generator of revenue, resulting from modest-margin transactions with a bank’s hedge fund client base. It’s safe because the bank’s risk managers scour the bank’s exposure to various hedge funds, and immediately flag any clients that become too big and a potential source of loss (it’s also “safe” because the bank’s prime brokerage management tends to make far less than the frontline Sales and Trading staff).

That is, at least, the theory. The practice, as the recent Archegos fiasco demonstrated, is anything but.

Case in point, the now infamous Credit Suisse disaster in its dealing with Archegos, which as of this moment have resulted in more than $5.4 billion in losses for the Swiss bank, and which as the FT reported today, resulted in a paltry CHF16 million (US$17.5 million) in revenue last year. In simplistic terms, this means that somehow the funding chain and the leverage Credit Suisse afforded to Archegos resulted in over 300x leverage in the wrong direction!

As the FT notes this morning, the paltry fees Credit Suisse received from Archegos “raises further questions about the risks the lender was prepared to shoulder in pursuit of relationships with ultra-wealthy clients” and adds that “the low level of fees and high risk exposure have caused concern among the board and senior executives, who are investigating the arrangement, according to two people with knowledge of the process.” It has also caused a flood of layoffs and terminations as the bank belatedly looked at its books – the infamous scene from Margin Call comes to mind here…

… and realized just how massive its exposure had been all along, and how nobody had any idea how big the loss would end up being until it was finally booked following the now infamous late-March liquidation frenzy.

…click on the above link to read the rest of the article…

The $2.3 Quadrilliion Global Timebomb

April 19, 2021

THE $2.3 QUADRILLION GLOBAL TIMEBOMB

Credit Suisse is hours from collapse and the consequences could be a systemic failure of the financial system.

Disappointingly, my dream last night stopped there. So unfortunately I didn’t experience what actually happened.

As I warned in last week’s article on Archegos and Credit Suisse, investment banks have created a timebomb with the $1.5 quadrillion derivatives monster.

A few years ago, the BIS (Bank of International Settlement) in Basel reduced the $1.5 quadrillion to $600 trillion with a pen stroke. But the real gross figure was still $1.5q at the time. According to my sources, the real figure today is probably over $2 quadrillion.

A major part of the outstanding derivatives are OTC (over the counter) and hidden in off balance sheet special purpose vehicles.

LEVERAGED ASSETS JUST GO UP IN SMOKE

The $30 billion in Archegos derivatives that went up in smoke over a weekend is just the tip of the iceberg. The hedge fund Archegos lost everything and the normal uber-leveraged players Goldman Sachs, Morgan Stanley, Credit Suisse, Nomura etc lost at least $30 billion.

These investment banks are making casino bets that they can’t afford to lose. What their boards and top management don’t realise or understand is that the traders, supported by easily manipulated risk managers, are betting the bank on a daily basis.

Most of these ludicrously high bets are in the derivatives market. The management doesn’t understand how they work or what the risks are and the account managers and traders can bet billions on a daily basis with no skin in the game but massive potential upside if nothing goes wrong.

DEUTSCHE BANK – DERIVATIVES 600X EQUITY

But we are now entering an era when things will go wrong. The leverage is just too high and the bets totally out of proportion to the equity.

…click on the above link to read the rest of the article…

Archegos Implosion is a Sign of Massive Stock Market Leverage that Stays Hidden until it Blows Up and Hits the Banks

March 29, 2021

Archegos Implosion is a Sign of Massive Stock Market Leverage that Stays Hidden until it Blows Up and Hits the Banks

Banks, as prime brokers and counterparties to the hedge fund, are eating multi-billion-dollar losses as they try to get out of these secretive stock derivative positions.

The implosion of an undisclosed hedge fund, now widely reported to be Archegos Capital Management, is hitting the stocks of banks that served as prime brokers to the fund. The highly leveraged derivative positions, based on stocks, had blown up spectacularly. Banks get into these risky leveraged deals because they generate enormous amounts of profit – until they blow up and banks get hit as counterparties.

Credit Suisse [CS] is down 13% at the moment in US trading after it warned this morning that “a significant US-based hedge fund defaulted on margin calls made last week by Credit Suisse and certain other banks,” and that it and “a number of other banks are in the process of exiting these positions,” and that the loss resulting from this exit “could be highly significant and material to our first quarter results.” The bank deemed it “premature to quantify” the loss.

Nomura Holdings [NMR] is down 14% at the moment in US trading after it warned this morning that “an event occurred that could subject one of its US subsidiaries to a significant loss arising from transactions with a US client.” It estimated the loss from this one client at “approximately $2 billion, based on market prices as of March 26.”

As Credit Suisse pointed out, “a number of other banks” are also involved as counterparties to that one unnamed hedge fund, and have been trying to get out of these positions since last week.

…click on the above link to read the rest of the article…

financial markets, archegos, wolf richter, wolfstreet, stock market leverage, credit suisse, banks, nomura

“Money’s Not Worth Anything Anymore” – Ex-Credit Suisse CEO Blasts “Crazy” Negative Rates

October 7, 2019

“Money’s Not Worth Anything Anymore” – Ex-Credit Suisse CEO Blasts “Crazy” Negative Rates

Oswald Gruebel, who served as Credit Suisse CEO from 2004 to 2007 and as UBS Group AG’s top executive from 2009 to 2011, has slammed ECB policy in an interview with Swiss newspaper NZZ am Sonntag.

“Negative interest rates are crazy. That means money is not worth anything anymore,” Gruebel exclaimed.
“As long as we have negative interest rates, the financial industry will continue to shrink.”

Who can blame him – judging by the all-time low in European inflation expectations, ECB policy has been an utter failure…

Gruebel is not alone. As European bank bosses cast their eyes at their share prices, they are fighting back, some have said – biting the hand that feeds, in their attack on ECB policies, warning of severe consequences to asset prices and the broader economy.

As Bloomberg reports, The ECB’s imposition of negative interest rates have created an “absurd situation” in which banks don’t want to hold deposits, rages UBS CEO Sergio Ermotti, arguing that this policy is hurting social systems and savings rates.

Additionally, Deutsche Bank CEO Christian Sewing warned that more monetary easing by the ECB, as widely expected next week, will have “grave side effects” for a region that has already lived with negative interest rates for half a decade.

“In the long run, negative rates ruin the financial system,” Sewing said at the event, organized by the Handelsblatt newspaper.
Another cut “may make refinancing cheaper for states, but has grave side effects.”

…click on the above link to read the rest of the article…

Australia’s Economy Is A House Of Cards, Set For Sharp Downturn In 2019

November 23, 2018

Australia’s Economy Is A House Of Cards, Set For Sharp Downturn In 2019

Damien Boey, a research analyst at Credit Suisse, has warned that economic growth in Australia could slow quite sharply next year, raising the prospect that a slowdown could be immient.

Boey expects the recent growth spurt driven by strong infrastructure investment, could fade in the first half of 2019, and the risks associated with housing construction and household spending from the downturn in real estate could signal that the Reserve Bank of Australia’s rate hike cycle would have to be put on hold.

“Our view is that the economy is overshooting,” Boey said.

“We believe that growth will eventually slow as timely leading indicators [such as PMIs] are suggesting.”

Boey said infrastructure investments had driven the recent surge in economic activity.

“We think that the [economy] is still being supported by infrastructure,” he said.

“The latest Access Economics data for Q3 suggest that growth in the stock of infrastructure spending has re-accelerated. And recently, project spending growth has been remarkably positively correlated with the cycle in domestic demand.”

While actual infrastructure investment has been substantial, Boey did not expect the trend to last due to the lack of new projects in the pipeline.

“In 2018 to date, actual project spending growth has accelerated, even as the project pipeline has thinned out,” he said.

“It is in this sense that we think infrastructure spending growth has been overshooting, contributing to the overshooting we are also seeing in domestic demand growth relative to leading indicators,” Boey added.

“However, the more growth in spending we experience today, the more we also eat into future growth, unless policy makers are able to adequately top up the project pipeline.

“As the saying goes, ‘serenity now, insanity later’.”

…click on the above link to read the rest of the article…

Swiss Bank Freezes $5 Billion In Russian Money

August 22, 2018

Swiss Bank Freezes $5 Billion In Russian Money

For years, Russian oligarchs and robber barons seeking to park their “unsourced” capital offshore and away from the sticky fingers of the Kremlin, treated Swiss bank accounts (preferably anonymous) with their “no questions asked” customer policies as, well, Swiss bank accounts.

No more.

One of Switzerland’s largest banks, Credit Suisse, has frozen roughly 5 billion Swiss francs ($5 billion) of money linked to Russia to avoid violating U.S. sanctions, according to its accounts, further increasing pressure on Moscow which today saw the ruble tumble to the lowest level in over two years.

The crackdown on Russian funds by the second largest Swiss bank, which owned aircraft surrendered by Russian tycoon Oleg Deripaska and had lent money to Russian oligarch Viktor Vekselberg before the sanctions, is indicative of the widespread fear among European banks of retaliation by Washington for working with targeted Russian individuals and entities.

“Credit Suisse works with international regulators wherever it does business to ensure compliance with sanctions, including compliance with sanctions involving Russia,” a bank spokeswoman told Reuters. The bank is complying with the latest round of anti-Russia sanctions announced in April by U.S. Treasury Secretary Steven Mnuchin meant to penalize Russia for its annexation of Crimea, involvement in the war in Syria and “attempting to subvert Western democracies”.

And more is expected to follow, as Trump scrambles to prove to Robert Mueller that he did no collude with Putin.

A popular financial and tourist hub for wealthy Russians with its combination of bank secrecy, political stability and glitzy ski resorts such as Zermatt and St. Moritz, Switzerland has become one of the most important destinations for money leaving Russia. Which is why, for Russia’s elite, such steps will close off an important avenue for finance as well as a safe haven for billions of rubles of their wealth.

…click on the above link to read the rest of the article…

The Richest 1% Will Own Two-Thirds Of Global Wealth By 2030, Report Finds

April 9, 2018

The Richest 1% Will Own Two-Thirds Of Global Wealth By 2030, Report Finds

Back in November, Credit Suisse highlighted an alarming – yet altogether unsurprising – milestone in the increasing concentration of global wealth that has been perhaps the most influential force behind the populist revolts that rocked the US in 2016 and have continued to unfurl across Europe. According to the Swiss bank’s annual “global wealth pyramid,” for the first time, the wealthiest 1% of the world’s population had accumulated more than half of its aggregate household wealth.

Credit Suisse’s researchers describe in stark terms how global wealth inequality had actually improved somewhat in the years between the start of the new millennium and the financial crisis – but in the years after, the gap between the world’s richest and poorest individuals widened dramatically, one of the most pernicious aspects of the Fed and the global cabal of central banks pumping easy money into the global financial system.

The researchers said that “our calculations show that the top 1% of global wealth holders started the millennium with 45.5% of all household wealth. This share was about the same until 2006, then fell to 42.5% two years later. The downward trend reversed after 2008 and the share of the top one percent has been on an upward path ever since, passing the 2000 level in 2013 and achieving new peaks every year thereafter. According to our latest estimates, the top one percent own 50.1 percent of all household wealth in the world.”

But while CS’s report was unequivocally dire, a recent report published by the UK Parliament is even more harrowing.

According to the Guardian, projections produced by the House of Commons library suggest that the top 1% of the world’s wealthiest individuals will own roughly 64% of the planet’s wealth by 2030.

…click on the above link to read the rest of the article…

Never Go Full-Kuroda: NIRP Plus QE Will Be Contractionary Disaster In Japan, CS Warns

March 8, 2016

Never Go Full-Kuroda: NIRP Plus QE Will Be Contractionary Disaster In Japan, CS Warns

In late January, when Haruhiko Kuroda took Japan into NIRP, he made it official.

He was full-everything. Full-Krugman. Full-Keynes. Full-post-crisis-central-banker-retard.

In fact, with the BoJ monetizing the entirety of JGB gross issuance as well as buying up more than half of all Japanese ETFs and now plunging headlong into the NIRP twilight zone, one might be tempted to say that Kuroda has transcended comparison to become the standard for monetary policy insanity.

The message to DM central bank chiefs is clear: You’re either “full-Kuroda” or you’re not trying hard enough.

But as we’ve seen, the confluence of easy money policies are beginning to have unintended consequences. For instance, it’s hard to pass on NIRP to depositors without damaging client relationships so banks may paradoxically raise mortgage rates to preserve margins, the exact opposite of what central banks intend.

And then there’s the NIRP consumption paradox, which we outlined on Monday: if households believe that negative rates are likely to crimp their long-term wealth accumulation, they may well stop spending in the present and save more. Again, the exact opposite of what central bankers intend.

In the same vein, Credit Suisse is out with a new piece that explains why simultaneously pursuing NIRP and QE is likely to be contractionary rather than expansionary for the real economy in Japan.

In its entirety, the note is an interesting study on the interaction between BoJ policy evolution and private bank profitability, but the overall point is quite simple: pursuing QE and NIRP at the same time will almost certainly prove to be contractionary for the Japanese.

Here’s how the chain reaction works.

…click on the above link to read the rest of the article…

Panic Below The Surface: “Banks Are Selling Energy Loans At Cents On The Dollar To Ensure Their Own Survival”

February 21, 2016

Panic Below The Surface: “Banks Are Selling Energy Loans At Cents On The Dollar To Ensure Their Own Survival”

One week ago, when we commented on the latest weekly update from Credit Suisse’s very well hooked-in energy analyst James Wicklund, one particular phrase stuck out when looking at the upcoming contraction of Oil and Gas liquidity: “while your borrowing base might be upheld, there will be minimum liquidity requirements before capital can be accessed. It is hitting the OFS sector as well. As one banker put it, “we are looking to save ourselves now.“

In his latest note, Wicklund takes the gloom level up a notch and shows that for all the bank posturing and attempts to preserve calm among the market, what is really happening below the surface can be summarized with one word: panic, and not just for the banks who are stuck holding on to energy exposure, or the energy companies who are facing bankruptcy if oil doesn’t rebound, but also for their (now former) employees. Curious why average hourly earnings refuse to go up except for those getting minimum wage boosts? Because according to CS “It is estimated that ~250,000 people have lost their jobs in the industry in the last 18 months.”

Which is bad news: as we reported late last week, the restaurant “recovery” is now over, so as these formerly very well-paid and highly skilled workers scramble to find a job, any job, they’ll find that even the “backup plan” has failed, with not even the local McDonalds suddenly hiring.

From the latest Things we’ve learned this week

One Last Cigarette? Some comments that stood out to us during earnings include, “We are in a period of unprecedented uncertainty.” “We are managing our business week-by-week, crew-by-crew and unit-by-unit.” “We are in a generational downturn.”

…click on the above link to read the rest of the article…

How The Rothschilds Made America Into Their Private Tax Fraud Backyard

January 27, 2016

How The Rothschilds Made America Into Their Private Tax Fraud Backyard

Back in September 2012 we first presented “the world’s biggest hedge fund nobody had ever heard of”: a small, previously unknown company called Braeburn Capital which, however, managed more cash than even Ray Dalio’s Bridgewater, the world’s largest hedge fund.

How had the little firm operating out of a non-descript office building in Nevada achieved this claim to fame? By managing the cash hoard (now well over $200 billion) of the world’s biggest and most valuable company: Apple.

But what was perhaps more notable is where Braeburn was physically located: Reno, Nevada.

We explained the company’s choice for location with one simple word: “taxes”, or rather the full, and very much legal, avoidance thereof.

Three and a half years later we encounter this quiet Nevada town once again, and once again it is Reno’s aura of tax evasion that brings is to the world’s attention courtesy of a Bloomberg report discussing “The World’s Favorite New Tax Haven.”

Only instead of Apple this time, the focus falls on a far more notorious company: the Rotschilds.

As Bloomberg writes, “last September, at a law firm overlooking San Francisco Bay, Andrew Penney, a managing director at Rothschild & Co., gave a talk on how the world’s wealthy elite can avoid paying taxes. His message was clear: You can help your clients move their fortunes to the United States, free of taxes and hidden from their governments. Some are calling it the new Switzerland.”

Ah, the rich irony: years after Obama single-handedly destroyed the secrecy-based Swiss banking model, the U.S. itself has taken over the role of the world’s biggest, if no longer very secret, tax haven, and the epicenter is this modest Nevada city located next to lake Tahoe, which has become the favorite city, if only for tax purposes, for such names as Apple and the Rothschild family.

…click on the above link to read the rest of the article…

Chinese State Firms’ Debt Hits New All Time High, As Profits Tumble

December 25, 2015

Chinese State Firms’ Debt Hits New All Time High, As Profits Tumble

Overnight China’s finance ministry reported the latest data on state-owned firms profitability. At a cumulative CNY 2.04 trillion (or $316 billion) for the January-November period, this was another nearly double digit decline, or -9.5% from the year ago period, following a -9.8% drop for the 10 month period the month before.

State-backed financial companies, which in China is redundant as all financial companies are state-backed, were responsible for roughly a third of the cumulative profit decline: excluding financial firms, combined revenues of state-owned firms fell 6.1% in the first 11 months from a year earlier to 40.7 trillion yuan, the ministry said.

According to Reuters, companies in transportation, chemical and power sectors reported a rise in profit in the January-November period, while firms in oil, petrochemicals and building materials – or a vast majority of them – saw a drop in earnings. Firms in steel, coal and non-ferrous metal sectors continued to suffer losses.

“The downward pressure on economic operations remains relatively big, although there are signs of warming up in some indicators,” the ministry said.

This optimism is, however, entirely baseless and we are confident that Chinese corporate profitability is set to go from bad to even worse. The reason for that is that at current commodity prices and production, virtually all of China’s steel industry is loss-making, while over half of commodity companies with debt do not have the funds to make even one coupon payment.

While the logical response to plunging profits would be for the government to enforce a strict discipline for excess capacity reduction, Beijing has been unwilling to do this, afraid of the outcome from the resulting surge in corporate defaults.

…click on the above link to read the rest of the article…

Tag Archives: credit suisse

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

Post navigation

Latest Posts