After two days of playing table tennis with clients' savings and investments held by failed bank Credit Suisse, the price for acquisition by UBS (formerly Union Bank of Switzerland,) has been agreed at CHF 3BN (US$3.25 billion), or 0.76
per share, meaning shareholders of Credit Suisse will receive 1 share in UBS for 22.48 shares in Credit Suisse. As part of the deal, the
Swiss National Bank is offering a 100 billion-franc liquidity
assistance to UBS while the government is granting a 9 billion-franc
guarantee for likely losses on dodgy assets that are part of the deal. In effect
this is a taxpayer-funded bailout (but don't call it that.)
wipe out bail-in will be the biggest loss yet for Europe’s $275
billion AT1 market, far eclipsing the approximately €1.35
billion loss suffered by junior bondholders of Spanish lender Banco
Popular SA back in 2017, when it was absorbed by Banco Santander SA to
avoid a collapse.
AT1 bonds were introduced in Europe in the wake of the 2014 global financial crisis to serve as a backstop when banks start to fail. They are designed to shift losses to bondholders or be converted into equity if a bank’s capital ratios fall below a viable level, effectively padding its balance sheet and allowing it to stay in business.The bonds were by Friday already trading at levels usually reserved for companies about to go bust. A slice of the bank’s $1.65 billion note, issued less than a year ago, changed hands at about 35 cents on the dollar, according to trade reporting system Trace.
And while it may be counterintuitive, according to the Swiss bail-in regime, AT1 debt is above equity in the loss absorption waterfall.
All this is very vague and technical but what it means is that while the takeover is agreed in principle, the deal may yet fall apart is, as banking industry insiders have warned, more nasties emerge as UBS auditors scrutinise the accounts of Credit Suisse. Once a paragon of banking integrity, Credit Suisse has been known to be in trouble for over a decade and has only stayed afloat this long due to certain creative accounting practices of dubious legality disguising the black holes in its balance sheet.
What is truly frightening is that many more banks are rumoured to be in similar or even worse trouble due to reckless lending during the years of insanely low interest rates.
U S Regional Bank First Republic Crashes As America's Banking 'Crisis In Confidence' Becomes Contagious
Shares in America's First Republic Bank's crashed when the New York stock market opened for trading this morning. The crash was triggered by a statement issued on Sunday night that sought to ease investor worries about the bank's liquidity situation in the wake of the failure of Silicon Valley Bank. Shares in the San Francisco based regional bank are down 60% on last week's close.
Do We Have A Winter Of Civil Disobedience Ahead?
As many people in Britain slap on the apres sun gloop in the wake of what passes for a heatwave in these cool cloudy climes, our inept politicians caught with their pants down by unusual weather as usual have heard that that winter is coming and are making plans for a coldwave. We are in the grip of an energy crisis at the height of summer. Last week, it was reported that the UK government is laying down plans for a “reasonable worst-case scenario” including blackouts for industry and even households. And this is as energy prices spiral out of control to new records every day.
Britain is Breaking Down; The Economy Is Struggling, Living Standards Are Falling, Institutions Are Failing
Successive governments have brought Britain to its knees.This article will focus on Britain as representative of the general malaise that is afflicting almost all the developed world. Our current crop of politicians have discarded the resources that brought the country out of the post war decline ... In spite of being rich in energy resources Britain is now in an energy crisis, our leaders have sacrificed prosperity on the altar of Net Zero, committing the nation to our reducing our 1% contribution to harmful emissions still further ...
"Revolution Has Begun": 75,000 Brits Plan To Stop Paying Power Bills In Protest At Energy Rip Off
Resistance is growing to spiralling domestic energy costs in Britain as more than 75,000 irritated people in the UK have pledged not to pay their electricity bill this fall when prices jump again.
If the government & energy companies refuse to act then ordinary people will! Together we can enforce a fair price and affordable energy for all," tweeted "Don't Pay UK," an anonymous group spearheading the effort to have more than one million Brits boycott paying their power bill by Oct. 1.
E U Central Bank Digital Currency Is The Death Rattle Of A Failed Experiment
The announcement from the European Central Bank (ECB) that is is to intrduce an official European Union digital currency spells the end of the European Single Currency experiment and with it the ambition of "ever closer union until the EU's member states were merged into a single political entity Digital Currencies might not quite be Ponzi schemes but on appearances the difference can be compared to that between a horse and a pony.
Negative Interest Rates - Final Nail In The Coffin Of Neoliberalism? Negative interest rates, in plain terms a situation in which we pay bankers for holding our money, are the latest ruse of politicians and economists to make uis start spending our investments and savings, thus kickstarting the global economy thy have screwed up.EXPLORE:
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