they don’t need a stunt for that

True
No government or powerful authority wants to take on the banks and just say the jig is up boys. No more bailouts, if you decide to play with risky invements then tough luck.
These communist safety nets need to go.

This post was edited by addone on Mar 19 2023 03:49pm

Like the bonds issued by...the government?

Outside of CS and SVB I'd say this is more the government's problem than a regulatory problem with the banks.

Sure, but this shouldn't come as a surprise to the markets. Credit Suisse have been in varying degrees of crisis dating back to before the move away from a zero interest rate environment, I think even to before the pandemic.



My point was that SVB's balance sheet ballooned very abruptly, so that tighter regulations and oversight for large banks would not have had many shots at catching their failure in risk management.


Agreed, that's basically what I wanted to convey (in layman terms...) in my earlier post tonight.

This post was edited by Black XistenZ on Mar 19 2023 03:56pm

Don't get it twisted everything carries a risk even so called "SAFE" gov insured bonds. Up to $250,000 anyway. What happens to US bonds and dollar when BRICS chess pieces move closer to checkmate?

Government and regulatory body are the same thing

Right



Well, it didn't really balloon because equity was fairly constant throughout, as I mentioned earlier the assets and liabilities are initially the same when a customer deposits cash. The same cash is represented on both sides of the balance sheet is the best way I can explain it, and that's totally normal for a bank.

There are two issues around oversight that I'd be looking at:
1) the capital ratios used risk-weight the assets, and I doubt they factored in much risk to their substantial bond holding
2) it's a basic audit test to look at specific SOFP accounts that have moved significantly in the reporting period. The auditors maybe should have flagged a going concern risk if they highlighted deposits were rapidly shrinking (which looks obvious to me)

That's how I see it from an audit background anyway, even though I got out of audit a while back

But different areas of the executive. Regulation =/= monetary policy

The way the UBS-CS deal happened is a pretty scary thing for market to see. Typically the owners/buyers have to vote on such things to happen. In this case the Swiss government, at least the way I'm understanding it completely circumvented that process. Realistically neither side (from stock holders perspective) would want this deal.

CS stock holders are getting much less than the market value of what the bank was trading on Friday (it's 3Bn now, not 2Bn that UBS is paying) while UBS stockholders which were never asked for this acquisition are getting probably a distressed balance sheet. UBS CDS spread is about to moon this coming week, personally expect a lot of UBS stock selling happening this week.

This post was edited by ofthevoid on Mar 19 2023 04:31pm

I get what you mean, I think I even read somewhere that SVB had more than enough nominal assets in their books to cover all depositors, their issue was just that a lot of it was tied in long-running bonds. So when depositors started withdrawing their money at a high rate, SVB was forced to cover them by selling off the bonds before maturity, which meant that they had to realize the losses on their bonds which they could otherwise have sat out.

Basically, their failure to match the timelines between their investments (long-term) and their potential outflows (possibly short-term) meant that the bank, rather than its customers, was gonna eat the loss caused by their failed investment strategy.







The Swiss government and central bank seemed desperate to get the fusion done before Asian markets open. They apparently didn't trust the backing from the central bank to reassure markets on its own. To be fair though, Switzerland is a tiny country with huge banks, the firepower of their central bank is rather limited compared to the size of their financial sector.

Also, the Credit Suisse is actually the Swiss bank which serves a majority of domestic customers, particularly small- and medium-sized Swiss companies, while the larger UBS has a stronger focus on foreign investments and investors. So in this sense, a collapse of the CS had the potential of disastrous repercussions for the Swiss economy at-large, even if it hadn't triggered further panic or bank runs.

This post was edited by Black XistenZ on Mar 19 2023 05:15pm