The End of Credit Suisse!

[@PBoyle]

Sign up for The Daily Upside using this link: bit.ly/3LWKfZx

[@leveltwotrading9657]

MY GUY HAS SOME GOOD INFO BUT acts like a ROBOT ai DOES EXIST

[@TheseNuts2]

Is there an ethics problem when they lie to people like that? Any recourse?

[@Falconlibrary]

Expecting bankers to fix the banking system is like hiring the town's worst arsonist to be the fire chief.

[@JohnDoe-kg6gy]

Why no mention of Credit Suisse woke policies including his gender fluid CEO? I love it, everything woke turns to shit.

[@GEB-yy3ud]

I only signed up out of respect Sensi.

[@wkingston1248]

This is a terribly sad day, Patrick will no longer have opportunity to mock credit suisse future displays of incompetence. 😢

[@awdrifter3394]

He'll have to switch to UBS.

[@volvo09]

Noooooo! Not credit suisse!

[@chrispowell1224]

Dont worry, the shit show that is Deutsche still exists.

[@hkchan1339]

Don’t worry, human stupidity has no limits. Patrick will have plenty to mock in the future

[@HatelivesNextDoor]

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😂"

[@foobarFR]

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.

[@lordphonix0994]

a fate worse then death

[@picketf]

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.

[@burnerheinz]

they even hung some garlands! though they all have a wierd loop at the bottom.

[@MenwithHill]

I can't believe Patrick bullied them into bankruptcy.

[@shikharraje]

Patrick Boyle cancels Credit Suisse 😂

[@rhs5683]

All they deserved. xaxa

[@samsmith9764]

I can

[@firefoxmetzger9063]

Wow, I didn't realize that there are people on KZbin who discuss finance at this level and with such clarity at the same time. Thanks for the entertaining and insightful video 👍

[@RabianskiT]

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 ❤

[@noyopacific]

"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.

[@mynameisntpatrick1476]

"Here is a chart of these bonds. They went to zero." Hahahha

[@albertlevert2988]

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.

[@anson1418]

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.

[@simony2801]

Well you either laugh or cry when you hear of the largesse given to bankers.

[@ibrahimkuyumcu2649]

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.

[@draconianregiment4925]

You get to have actual class with Patrick? I'm jealous lol.

[@putinski666]

There are finance related subjects along with something like molecular genetics? 🤨

[@retinapeg1846]

@@putinski666 probably something like computational finance. I did a course in stochastic analysis of derivatives in my masters in physics.

[@putinski666]

@@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.

[@peterheinzo515]

i think your main takeaway from this channel should be: even the experts cant predict the markets and you should only invest what you can afford to lose

[@none3763]

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.

[@Jim-Tuner]

I would agree. This will end badly and the country will be forced into an even larger bailout.

[@themsmloveswar3985]

Now the same clowns are ruining Washington with corporate lobbying.

[@antoniofernandesmarchetti1097]

That aged like Fine wine, which is terrible!

[@tommybazar]

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.

[@pettahify]

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.

[@vinniechan]

On the flip side AT1 does pay a high yield like 9%

[@sblijheid]

You would probably not get good management. They want secure incomes too.

[@CHR1SZ7]

@@sblijheid bonds like this do provide a secure income for management provided they do their job properly

[@tolep]

@@sblijheid They can sell the bonds, as I understand it.

[@sudhindrakopalle7071]

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.

[@nicholaswoollhead6830]

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.

[@MokotediToday]

Yes he does, he mentioned it before.

[@jaysdood]

Any bank deemed too big to fail should immediately be broken up.

[@DanHazard]

Lmao, i cant get over how happy Patrick looks in the Thumbnail Next to the text "The end of Credit Suisse!"

[@nmccw3245]

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. 😜

[@nmccw3245]

… and I expect my Toblerone.

[@benchoflemons398]

It’s a hell of a lot more than a 50% haircut, right? Like at least 80%

[@mastercommander4535]

As a bond holder my haircut was 100%

[@nmccw3245]

@@benchoflemons398 - I got in for under two bucks a share.

[@YungPickleDaSour]

@@mastercommander4535 sounds like a beheading more than a haircut lol

[@drbrendanful]

I bet Patrick has known this video has been coming for a while

[@w花b]

The research has been done and he was just waiting for articles to come out just to be sure.

[@michaelvick2872]

Considering how badly he shit on credit suisse last video he might’ve actually helped their demise lol😂

[@martinleepgg]

​@Michael that's a shade harsh

[@mikatu]

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.

[@johnc2438]

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.

[@maestrovso]

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.

[@Jim-Tuner]

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.

[@GameplayerCanal]

​@@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)

[@Jim-Tuner]

@@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.

[@pettahify]

​@@GameplayerCanal Yeah, 10% is veeery nice, and as such, it comes at a price

[@ComradeOgilvy1984]

@@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.

[@PBoyle]

Thanks to our growing list of Patreon Sponsors and Channel Members for supporting the channel. www.patreon.com/PatrickBoyleOnFinance : Paul Rohrbaugh, Marc De Mesel, Nate Stapleton,Timothy Baird, WIlam, Hernan Merino, Random Encounter, Nieuwsbrief Ikwil, Bee Positive Consulting, hyunjung Kim, John Cadena, Ian Tracey, Callum McLean, Oscar, Simon Pena, Ed, Pavle Obradovic, Erik Van Ekelenburg, David O'Connor, Pjotr Bekkering, Alex, Robert W Proudfoot, Robert Muller, Andre Michel, Ivan Iliev, Gopaljee Atulya, Mark Hooker, Artem Vasenin, P H, Sebastian, Michal Lacko, Peter Bočan, Michael Pierce, V Jordan, Gil, HalfwitHam, Mark Brophy, David Urdenata, Juan Valdez, Bruce Roberts, Chad Norman, Bruce Roberts, Shamikh Rana, Friday Guy, Marc De Mesel, Augusto Ramos, Soy Boomer Doomer, Bob Slartabartfast, Robert Feiler, Camil Dbouk, Erik Montesinos, Matthew Loos, Az Indragiri, Aman Bali, Lautaro Parada, Pratap, Deborah Joseph, Robin Sung, Kurt Johnston, Dominik Auerbach, Gurmeet Kaushal, John Hall, Dara Mo, Josef Goergen, Wilbert Cheng, Jaroslav Tupý, Trevor Lucey JB Weld, Alex, Carlos Figuera, Peter Pomelov, Null065, Rick Thor, MeBerzerk, Henry Nguyen, Sola F, The Collier, Carlos Mejia, J Wadia, Bitcoin OG, easy boekhouding, Albert, Eugene Jung, Daniel Cervini, Jonathon Yong, Iris Ji, Emil Nicolaie Perhinschi, Charles, Eli Auto, Excks, Michael Li, Par Hedman, Praveen Mishra, Gerard Scott, joel köykkä, Areeb Ahmed, David Wang, Rodolfo Cornetti, Daniel Winroth, johnny, Nick Jerrat, Chris Houston, Alastair Currie, Robert Griffin, Andrei, zizi Golo, Fab Vida, Constantin Petrenco, pawel irisik, NotAScam, James Halliday, 22 Dust, Carsten Baukrowitz, Heinrich, Arron T, Ben Brown, Stephen Mortimer (to The Moon), Ryan B. 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[@Nolaris3]

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.

[@LLittleLessons]

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

[@ridgesail]

This is definitely my favourite AI generated character.

[@LinkinPark4694]

Was looking for this comment…

[@Dstew57A]

Your fucking rude ..imbecile

[@Honestly__now]

With ironically and undoubtedly more heart, wit and knowledge than a lot of extreme creeps like chamath

[@benchoflemons398]

💀

[@craiggillett5985]

Saves time for him I guess - put the doppelgänger’s to work

[@oliverknill631]

yes, it was a bit like watching monopoly. In the Swiss version there is the Paradeplatz. Who can buy this, usually wins the game.

[@franco521]

Patrick is having a field day with this one look at that thumbnail lmao

[@Hotshot2k4]

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!

[@StefanMedici]

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.

[@ivayloivanov8153]

Timely updates on a quickly developing banking crisis. Thank you!

[@AsbestosMuffins]

really funny that bankers and VC bros are acting like interest rate risk management is an alien concept

[@sblijheid]

Why not? If ypu know that biden and the Fed will bail you out, life is great. Keep on partying.

[@tomo1168]

Patrick, your explanation is waaay better, than what the whole swiss media have covered. Unbiased, detailed and covering everything important. Thank you!

[@Monsterpala]

Well it is not in the interest of the media to explain things or stick to the truth. That doesn't pay but gets you demonitized or shut down. But Patrick is still far better than any other finance yt I know, explaining why at1 was written down, others missed the 9% and involved risk and made it sound like poor investors and the public was holding all the bonds.

[@FlyWithMe_666]

Professional investor: “What?? Zero? Who reads the fine print??”

[@gigikontra7023]

What, Swiss insolvency law modified on a Sunday by emergency decree invoking war-time exceptional powers to allow wipeout of AT1!😂

[@scottcameronpedigo219]

@@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.

[@gigikontra7023]

@@scottcameronpedigo219 read the docs, man, then come and talk to me. Thanks

[@forestpump3]

The blue-tick roast of Justin Sun is just why we love Patrick so much!

[@juhanivalimaki5418]

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.

[@gigikontra7023]

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?

[@saralotti7174]

So you think an “emergency use approval/agreement was awarded in error? Maybe based on fraudulent data? That has a familiar ring to it…😏💉💵

[@iainkillion262]

I know you had fun making this one lol. Now I’m waiting for Duetche Bank and SoftBank because of course they’re involved.

[@Dragon-Believer]

I'm waiting for the inevitable collapse of Binance. Maybe it will be around Halloween because there are so many skeletons in that closet.

[@CaptainRon1913]

@@Dragon-Believer Really, How do you know? Please do let us in on your "skeletons in that closet" expertise

[@Dragon-Believer]

@@CaptainRon1913 because I'm not an idiot. It's obvious. It's an obvious ponzi scheme.

[@themsmloveswar3985]

Indeed.

[@PointsofData]

​@@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."

[@Dragon-Believer]

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.

[@taffinjones8641]

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

[@thomasherrin6798]

It's not a bailout, it's a bailin, it's all Swiss!?!

[@JohnDoe-kg6gy]

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.

[@mikatu]

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.

[@oneukum]

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.

[@JatinV1]

Same happened here(India) with AT-1 Bonds of Yes Bank.

[@Confucius_Says...]

When did this happen?

[@sumitroy3483]

​@@Confucius_Says... 4 years ago.

[@NICK-uy3nl]

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

[@CaptApril123]

'Here's a graph of those bonds...(graph looks like a cliff) they went to zero' I nearly fell off my chair laughing. Patrick is both informative and entertaining.

[@Martin-kc1xj]

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!

[@Confucius_Says...]

A minute of silence on the untimely demise of Debit Suisse... Thereby robbing Patrick of a lifetime of comedy material 😂

[@justanoman6497]

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.

[@defenstrator4660]

The problem with regulators is they claim people should trust them while simultaneously claiming they have to lie to people for the greater good.

[@alexanderSydneyOz]

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.

[@laurent3415]

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.

[@indian9632]

Never trust any gov organization

[@paulgibbon5991]

"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

[@laurent3415]

@@paulgibbon5991 OMG, that was the quote I was looking for. I couldn't remember the movie it came from for sure.

[@PRAR1966]

Very much appreciated to have a Anglo/European perspective done with detail - thank you for this PB.

[@jakebrodskype]

What effect will the suddenly crashing AT1 bond prices have in other countries, particularly Asian banks? It can't be good.

[@briankrebs7534]

So with UBS obtaining indemnity for the legal liabilities of Credit Suisse, does this merger leave their potential claimants of any damages no legal recourse in the jurisdiction in which this indemnity was granted?

[@none3763]

no. indemnity means the swiss govt pay the legal liabilities and not the new ubs/credit suisse. patrick said the deal is that ubs/suisse is liable for the first 5 billion, and the swiss taxpayers pick up the next 9 billion after that.

[@Finderskeepers.]

UBS only have an indemnity not Credit Suisse or any other broker , so any claims against Credit Suisse or brokers are payable ASSUMING a claim is accepted failing which a ruling by a court with jurisdiction, thats my understanding of the deal. Time will tell, the Swiss government could make a new law as they threatened and obviously claims are expected with 9bn in the budget, hence the indemnity.

[@briankrebs7534]

@@none3763 lol nice, they're not even playing the "okay I'll just pay the fine" game anymore. "You'll pay my fines..." Appreciate the answer.

[@SnowmanTF2]

Banking sandals will just not be the same without Credit Suisse

[@garygarside9782]

is soft bank still around?

[@gerhard7323]

Were Credit Suisse big into footwear?

[@jasonhaven7170]

Don't worry, there's plenty of other European and American banks to watch.

[@scottcameronpedigo219]

@@gerhard7323 There were a lot of crocks. Crocks of what I won't say.

[@jb_makesgames2264]

Excellent summary of the negotiations between the two banks. A lot of coffee and pizza kept people going,

[@beefchampion2792]

The toblerone bit had me laughing out loud! You are a comedic diamond in the rough, Patrick!

[@KapiteinKrentebol]

It's a tragic day indeed, We've just witnessed the death of a financial meme. R.I.P. Credit Suisse 1856-2023 †

[@rickloginname]

​If the Saudi National Bank is unhappy - we all winners. I loved that they zeroed out the "cheater" bonds.

[@faceclutch5555]

You live off of the PetroDollar.

[@rhetoric5173]

Saudis give value to paper

[@abdelrhmandameen2215]

Why is that? The Saudi investments are what are keeping many financial markets viable.

[@boxtodragon]

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.

[@rhetoric5173]

@@abdelrhmandameen2215 nothing to be proud of. Should have their own currency backed by oil.

[@smjaiteh]

The worst part about this whole situation is that Goldman Sachs is still doing great, despite being almost just as scandal stricken as Credit Suisse.

[@dhvanitdesai1044]

Aye but GS doesn't lose money on every scandal like CS did, on the contrary, they manage to make money

[@Agnemons]

Please get the name right. It's "Goldman Sucks".

[@aredub1847]

well they get a pass for the lack of the nazi gold connection.

[@firesideshats]

Yeah that's because the yanks don't have any rules against there bullshit. Problem is they sold any power off with Reagan so nothing will happen unless the yank populace drags there exec and other high ups into the street.

[@dannylo5875]

They technically have more competent managers.

[@Slug99]

I came to this channel for the insightful commentary on financial matters with an occasional dash on humorous remark throw in, but I stayed for the avant garde lighting techniques.

[@Byzmax]

What a great explanation of what happened and is happening around this event. I learn an enormous amount from you videos that would otherwise pass me by. Far better than any other commentator or news outlet with added sarcasm. Thanks

[@screaminjackson1216]

"Switzerland needs to be aware of its responsibility beyond its own borders".... I really don't know how to handle this statement

[@BlackJesus8463]

It's good business.

[@Pushing_Pixels]

They have a responsibility to money launderers everywhere.

[@sblijheid]

It sounds like something you would say in an election campaign and have all your brain dead constituents scream: "YEAH."

[@A_friend_of_Aristotle]

Thank you, Patrick, for a very informative lesson. I was starting to get worked up about the treatment of CS's bond holders, but now that I know that the terms and agreements reserved these rights for the company I feel better. It's also a good lesson for us all: read the terms and agreements. If you don't want to get spanked like the Credit Suisse AT1 bond holders have been spanked, don't sign the agreement that makes it clear that a good spanking is one of the things you are agreeing to! 🙂

[@edspeich2977]

Always enjoy your podcast. Thank you so much for all the effort, energy, and delivering concise, and relevant news!

[@naswinger]

Patrick's thoughts about Credit Suisse: "Oh no! Anyway..."

[@bsphil]

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

[@briankrebs7534]

Patrick, you look positively radiant in this lighting

[@davidjma7226]

It's funereal, to mourn the death of CS.

[@hadensmith3323]

Disturbing on many levels, but for me what hit home was tech, a field which I have worked in for about 16 years and have just - happily - left. What really was tragic about tech was its financialization. So many companies more concerned with either an IPO or an inflation of their stock price than they were with creating value and solving problems. It led to all kinds of toxicity on the small scale, and lots of wasted money and talent on the large scale. But now I have come to understand that the reason tech has become like this is that it's a place to park cheap money.

[@motionthings]

Fun fact. Toblerone is not Swiss anymore and they have to remove the mountain with the bear from their boxes :)

[@paxdriver]

What boggles me is the logic here - bond holders only lose if the business is mismanaged, but shareholders are protected, yet only shareholders can impact or oversee the operations of the business. Even without a vite, shareholders have internal access and can represent themselves at general meetings but bond holders just sit outside and wait for the professionals to release the selectively redacted minutes at best.

[@Jim-Tuner]

The problem is that a particular product was called a bond when it was really no such thing. Words used to mean things.

[@TheHesseJames]

If a bank pays you more than 9% interest, it may be a hint that something might be different with this security.

[@gigikontra7023]

​​​@@TheHesseJames so it's not a problem that the insolvency law was modified in a Sunday by invoking war time powers to allow the wipeout of AT1? 😂

[@TheHesseJames]

@@gigikontra7023 no "war time powers" have been invoked. That's just nonsense. The "Notrecht" and/or "Dringlichkeitsrecht" have been used because there was no time to do it the ordinary way. And it will be done the ordinary way later on.

[@IamGrimalkin]

@@gigikontra7023 It wasn't. It was always in the contract of the bond. Watch the video again. The bond explicitly states it can be zeroed at the whim of the regulator, or when CS receives extraordinary support from the public sector, without which they would become insolvent (which is what happened, UBS wouldn't have taken the deal if it wasn't for the public sector). If people didn't read the terms of the bond, that was their own problem. The emergency law thing was nothing to do with the bonds and was instead the forcing of CS and UBS to merge without a shareholder vote.

[@shatakshiagrawal3062]

I always look out for your video in anything happening in the financial world. So so glad that you are making these amazing informative videos with simple explanations so that even the retail investors and common masses can understand what is happening behind the scenes of financial jargon and difficult concepts.

[@oliverknill631]

thanks for giving more insight into this turbulent deal.

[@vicwiseman6038]

I just want to point out that THIS production plays like a feature film. Absolutely stellar job with this video!

[@philaxx8888]

Pat...your presentation is the best, clear and concise

[@davidchibukosiakubai3075]

The best of the best channel for financial analysing and quantitative finance news

[@greyfox78569]

Wasn't an ex Suisse employee also running FTX?

[@Dragon-Believer]

She worked in risk management for Suisse. I forget what her job was at FTX? She has some kind of resume now.

[@scottkirby5016]

@@Dragon-Believer She was head of risk...not sure if at FTX or Alameda

[@fatcat22able]

@scottkirby5016 Like lightning striking a dumpster twice 😂

[@OnTheThirdDay]

I was thinking after seeing Wallstreet Millenial's video on Credit Squeeze a few days ago that FTX obviously chose the risk management person from the right bank: one fraught with illegal scandals and bad investments.

[@eric3434]

Constance Wang, Chief Operating Officer at FTX. Hell of a name~

[@Theroadmen69]

I learn more with Patrick than going to school great video, like always shareholder lose their investments/ incompetent executive's get paid 🤷‍♂️🤦‍♂️

[@mingchi1855]

- 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.

[@henrygrey285]

Employes bond options were zeroed. This morning in all Swiss newspapers. But only ones that were not yet paid out... So (for now) the already payed out ones that also contributed to high risk taking are not affected.

[@hemaccabe4292]

I think the most interesting thing about the AT1 write down was that it was a tacit admission by Swiss regulators that this was a bailout. They didn’t want to call it a bailout but they wanted the $17B more.

[@thomasherrin6798]

By not paying the AT1's it is not a bailout, but by giving the Shareholders a 60% 💈, it is a bailout, they have also guaranteed 10 billion or so in loans to UBS but that seems a good trade off compared to continued support for Credit Suisse which would have been more costly with any further delays, so it's the shareholder issue that's the problem!?!

[@hemaccabe4292]

@@thomasherrin6798 My comment is not evaluating the soundness of the policy, though, in fact, I’m not in favor. Just the hypocrisy of the Swiss government trying to hide the truth, that this is a bailout. I appreciate your position, but disagree. Haircuts happen all the time in mergers. The lack of an opportunity to vote by the shareholders is another sign this was a bailout.

[@alexanderSydneyOz]

People just love claiming this or that is a "bailout", but this deal is not a "bailout" in any sense. If anyone thinks otherwise, go ahead and give a definition of this emotive, rubbery, never-defined expression. The essence of "bailout" as usually used, is having public funds being transferred to individuals or corporations. That has not occurred here. Nor does favoring one type of investor over another constitute "a bailout", not least because the terms of the bond specified it. Nor are loans or loan guarantees "bailouts", and for the same reason. Perhaps the OP could state what truth was hidden by FINMA?

[@ProfAzimov]

​@@alexanderSydneyOz Taking on risk is considered a bailout.

[@Huskrrrr]

This sounds eerily similar to the BoA acquisition of Merrill Edge.

[@scottkirby5016]

Question: With SVB et all you covered banks needing to hedge their interest rate risk and SVB's failure to do so....which begs the question who is this risk being laid off to by those who are hedging? If it has a daily cash settlement (swaps I imagine) how much runway do they have? If it is more of an insurance if the HtM bond's loss is crystalized by a sale they may have a huge potential liability building up that if called to pay could be a major contagion risk. It is is various hedge/investment funds I would expect both leverage/liquidation of other assets (cue vicious cycle)/and withdrawal of investor monies leading to problems...if insurance Cos et al an AIG/Ambac/MBIA type problem seems very possible. Someone has to be taking the risk on these things unless it is being turned into cash losses, but it leaves a counterparty risk. Yeah found the stock/bond brouhaha to be a farce since the prospectus made it clear this could/was likely to happen. It is like they say CS-AT1 on their Bloomberg terminals and just bought it.

[@Finderskeepers.]

Many investors what to convert fixed income to variable income and visa versa so there is a natural market before looking at speculators who are happy to take a position. A credit risk is assigned to a swap together with a counterparty risk which sets limits between parties. SVB issue was funding a variable overhead that increased when variable interest rates went up with fixed income which resulted in capital values going down when long term interest rates shot up and these losses got crystalized due to cash calls. Mark to market those loses would of had to been booked anyway. Basically SVB were making a margin on the difference between long and short interest rates at the expense of being liquid. I would immediately question managers bonuses on this. Its basic treasury management.

[@scottkirby5016]

@@Finderskeepers. yeah I actually get all that. That is the pro forma answer to what happened. But it treats the question of risk as one that just "goes away" when it doesn't Someone is taking on the interest rate risk or having to pay out more via a swap and thus is loosing money. My question is about the counterparty risks developing from the use of these forward/swaps.etc that SVB should have doing but wasn't. If the risk is not yet realized, and just being carried, then it is vulnerable to trigger when some of does go off and major contagion (the MBIA/Ambac wrap panic of '08 deja vu mentioned) or if someone is taking losses and paying out daily (like I would expect on swaps) that money may not last forever (and may show stresses before that) if it puts too much pressure on those parties (esp if interest rates keep rising) at which point the bank in question will suddenly become unhedged and in the same position as SVB was.

[@Finderskeepers.]

@@scottkirby5016 Some funds naturally have fixed income eg property funds with 5 year rent reviews and want to match there variable overhead eg variable rate loan with the income stream to create a natural hedge. There is always a risk with a forced unwinding of a position, its a question of how its unwound. 3years into a 10 year swap can be unwound with a 7 year swap. SVB invested in illiquid assets funded by short term liabilities that got called. Swaps dont have a margin call, the swap line might which is down to the counterparty agreement rather than the ISDA. Your issue relates to the credit risk of the counterparty which is accessed like any credit and depends on the security, if the bank has the property as security a natural hedge is built in while the property is owned. Generally its down to the credit rating of the parties involved, much like store credit. Its wrong to assume they are losing money, they could be in the money. Take in a 10 year deposit at 3% when swaps are at 5% is 2% up.

[@Ok.ok.]

The quality of these videos are so good! I very rarely decide to subscribe to channels, but I decided to make an exception. Great quality, truly top notch!

[@Ok.ok.]

That is a scam accoubt

[@TheGoldenFluzzleBuff]

I don't like it when governments force organizations to act against their own will. Tell a bank "do this or fail", sure. But threatening to remove a board of directors does not sit right with me

[@richardsmith579]

Brilliantly done. This is suddenly my go-to channel for financial news. Governments and banks seem to be equally crooked. Which I think I knew already, sadly.

[@JeredtheShy]

We live in strange times when the risk comes from bonds.

[@Jim-Tuner]

Words like "bond" used to mean something. Not anymore.

[@puma7171]

Bonds are supposed to be risky in the event of a failure. Btw Equity holders also were de fact wiped out (-90% over a year)

[@tanias4877]

Wow, just wow ... thanks again Patrick for your analysis. BTW, I prefer this lighting used for the episode. Happy days all 🙂

[@540chevhell9]

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.

[@michaelimbesi2314]

But of course. Credit Suisse doesn’t want to launder money for just anybody, they want the whales :P

[@tolep]

As Patrick mentioned in other video, dealing with US customers is very costly for any bank in the world.

[@dragonseatcheese8727]

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 KZbin comment sections or something. It's truly spectacular.

[@conservativemike3768]

Bond holders can partially recoup their losses by converting CS offices into luxury timeshares.

[@vicmarc4984]

I really enjoy this guys content tho! Even though I’m angry about banks, I am grateful that Patrick is taking the time to explain it to us

[@orionh5535]

Thatd be a smart way to do it. Maybe hes just good at memorizing his script.

[@dosgos]

AT1 treatment seemed punitive and haphazard. This "protection" will need to be reworked.

[@brettrace]

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😅

[@michaelearlgrey]

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.

[@notastone4832]

@@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)

[@mikatu]

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.

[@oneukum]

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.

[@platinumsun4632]

Banana republic? Whats wrong with our finance center.

[@Largecow_Moobeast]

Yes, but will ubs begin selling flip flops? The market won’t settle till we know this.

[@ForeignCorrespondent1940]

19:03 This guy working two phones symbolizes the go-go Eighties in a nutshell. 💸💸💸

[@choopa1670]

Patrick you are by far the best economic news presenter I have listened too. Love your dry humour and jokes 👍🏽

[@savagepro9060]

"economic news presenter " is not "economics news presenter " the former is very concise with his arguments, the latter just converses on economics, regardless

[@blueyhis.zarsoff1147]

having worked in It in the banking world, I have never heard anything but the Swiss banks are basket cases from colleagues that have worked there over the last 40 years.

[@mikebaker2436]

My dad worked for Wells Fargo when it absorbed Norwest. It is amazing how much of the scandals can be traced back to that merger. I feel like Credit Suisse is going to be a similar thing for UBS.

[@gen-X-trader]

I just wanted to tell you that I absolutely love your dry sarcastic British humour that finds its way into these videos at the absolute perfect moments 😂

[@gerhard7323]

​@@patrickjoesphfallon1486British Isles humour?😁

[@jasonhaven7170]

@@gerhard7323 The Irish hate it when you call the archipelago the British Isles.

[@gerhard7323]

@@jasonhaven7170 I know. Couldn't resist it.

[@mitchhonan9730]

Is Kevin O'Leary about to start handling media for Credit Suisse execs?

[@jimmymena5536]

Thanks Patrick for your clear explanation of all these situations. I am not a financial guy but you put the information in a very easy way to understand. Thanks again and please keep the videos coming. BTW....do not change your sense of humor...."Toblerone".hahhahaha.

[@TheCakeIsALie422]

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 😅

[@Bob-ke9in]

Thank you for clarifying what AT1 bonds are. I saw a reference to them in the WSJ but didn't understand it's significance.

[@nolandoffing9253]

Here before UBS backs out of the deal

[@Dragon-Believer]

I don't think they can. What I'm surprised is that Binance hasn't gone to zero yet. That is some voodoo.

[@stevens9625]

Hardly. UBS gets to take over its only competitor in Switzerland on the cheap, get billions of tax payer money to cover potential losses of the merger AND be protected from any illegal bs CS has hidden in its books. Why would UBS risk the ire of embarrassing the Swiss government now by walking back the deal?

[@jerryhu9005]

The Swiss regulators are basically holding a gun to their heads

[@manojhegde3235]

Brilliant coverage. "Not even a Toblerone" was the highlight

[@granitstudenica1066]

What a Suisse ending. I bet UBCing some credit 🎉

[@douginorlando6260]

seven things in a row they did to cause small banks to fail: 1… taking additional cash from them via special FDIC assessment 2… insuring big depositors only if they move deposits out of small banks to big banks 3… During congressional hearings, Yellen told big depositors they will be fully insured only if they move deposits out of small banks 4… bank accounting regulations that let banks look solvent on their books, but aren’t if big depositors all pull their money (mark to maturity instead of mark to market) 5… sucker punch banks with zero interest rates for years, then suddenly jacking up interest rates, causing huge declines in bank assets (long bonds, mortgages). 6… increasing interest rates again even after confidence in bank deposit safety is reeling. 7… throwing economy into a recession by high interest rates, causing many foreclosures, credit cards & car loan defaults

[@olivegrove2615]

I bet UBS & Credit Suisse were peaking through the blinds at each other. 👀

[@happystar2058]

Just discovered your channel today, Mr. Patrick. Thanks for the insight and helpful explanation of this situation. I also subscribed