Credit Suisse on borrowed time?

russell.cabbage

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The FT article.

Credit Suisse shares hit record low amid fears of a capital raise
The Swiss bank is under pressure to revamp its business and restore investor confidence

Credit Suisse shares tumbled to a record low on Friday, taking their decline this year to more than 50 per cent, following a report that the embattled bank was sounding out investors for a new capital raise.

Investors were responding to an article published by Reuters on Thursday afternoon that said the bank had been contacting investors to gauge interest in a fresh capital raise and that it was considering pulling its investment bank out of the US.

Credit Suisse did not comment on the capital raise, but denied it was planning to exit the US market.

People close to the bank said asking shareholders for more capital would be a last resort given the depressed stock price. Last April the bank was forced to raise SFr1.7bn of capital from investors as it sought to rebuild its balance sheet following back-to-back crises involving Archegos Capital and Greensill Capital.

The stock fell more than 9 per cent in afternoon trading to SFr4.22 ($4.29). Since the collapse of Greensill in March 2021, which led to Credit Suisse closing a $10bn group of investment funds, the bank’s shares have plunged 67 per cent.

A common refrain in Switzerland in recent weeks is that it is cheaper to buy Credit Suisse stock than a coffee in Zurich.

The bank’s board and executive team is in the middle of planning a major revamp of the business, which would strip back its investment bank and lead to thousands of job cuts.

Chair Axel Lehmann installed Ulrich Körner as chief executive in the summer with a brief to execute a radical shake-up, less than a year after the bank’s previous strategic review.

Under the latest plans put forward to the board, the investment bank would be divided into three and a “bad bank” holding pen for risky assets would be resurrected, the Financial Times reported this week.

Credit Suisse board members have accepted they will need to sell some assets to avoid a capital raise, with profitable businesses such as the New York-based securitised products business earmarked for sale.

Citi analyst Andrew Coombs said this was a possibility in a best-case scenario. “The net charge for an securitised products group exit could potentially be absorbed without the need for a capital raise, which we expect management would be keen to avoid with the stock trading on only 0.3 times price to tangible book value,” he said.

Last month, analysts at Deutsche Bank said the costs of paring back the investment bank would leave a SFr4bn hole in the group’s capital position due to restructuring costs, growing other business lines and strengthening its capital ratios.
 

OldGarandDad

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@russell.cabbage you beat me to it. Credit Suisse is probably the new Lehman Brothers or at least the Bear Sterns of 2022. I worked for American Home Mortgage (AHM) in 2008. It is still hard to imagine that the #2 mortgage company could evaporate over a weekend. We heard on Thursday that the CEO refused to pay the dividend. Friday was pure Twilight zone. Saturday we got a call at home to bring in all our stuff on Tuesday. That was it. Wednesday was filing unemployment benefits. That debacle put my career back at least 5 years.
 

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A potential global contagion. CS might be the next domino. But who else gets taken out because of their collapse?
 

OldGarandDad

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A potential global contagion. CS might be the next domino. But who else gets taken out because of their collapse?

Credit Suisse got hit with the one, two punch. First, they took a bath when all the sanctions against Russia left them holding the bag for $1.7 billion and then the bankruptcy of Mexico's Credito Real for another measly $100 million but remember it only takes one more straw to break the camel's back. Let's not forget the dozens of other deals gone bad that don't make the financial news.

Something triggered off the UK bond market meltdown but it seems no one is talking honestly about what happened.
 

Zed

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Any credibility to this? Apparently Credit Suisse is on the brink of collapse.




Let me know if the article won't load due to paywall bullshit.


Deutsche Bank? Although they have been a dead man walking for so long there has to be a rescue plan in place.



You just can't look away from this wreck.
 

russell.cabbage

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Deutsche Bank should have died years ago, the rescue plan was enacted before the beer virus.
 

Goldhedge

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It is still hard to imagine that the #2 mortgage company could evaporate over a weekend.
If you haven't seen "The Big Short" movie, or read the book by Michael Lewis... you'll clearly see what happened. The whole mortgage debacle was a house of cards. It's kind of like covid in that respect. A pack of lies upon a pack of misrepresentations, only it was a financial land of make believe. The movie and the book are pretty close together in plot.

Today's banking system should have crashed in 2008, but Obama said 'We're not just going to kick the can down the road." while he was kicking the can down the road. It's hanging by a thread IMO. A house of cards just like the stock market with $4 quadrillion in unregulated derivatives.

But hey, who knows? They might be able to keep it together... unless a world war happens where they can hide everything behind austerity measures and shortages caused by 'the war' of course - which reminds me of Donny Rumsfeld saying "We don't know what happened to $3.2 Trillion" on 9/10/01.
 
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<SLV>

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The rumor is enough to sink them. It is all a con(fidence) game. Once confidence is lost, game over. Same is true with currencies.
 

pmbug

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Central bank or government intervention can restore confidence. Worked for DB.
 

#48Fan

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This harkens me back to the 3 Arrows Capital fiasco in the crypto market. Big difference: no government bailouts.
 

Goldbrix

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Any credibility to this? Apparently Credit Suisse is on the brink of collapse.




Let me know if the article won't load due to paywall bullshit.

They do appear to be in trouble. Stock down. CDS up.
Credit Suisse is part of the cabal manipulating Gold and Silver physical pricing. Probably the weakest sister of the consortium.
 

OldGarandDad

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The real question we should all be asking is if Credit Suisse goes belly up, who is going to profit from it?

We all know that Bear Stearns was backed into a corner and slaughtered and Lehman was carved up like a Thanksgiving turkey with the buyers getting some really productive assets for pennies on the dollar.
 

Goldhedge

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On telegram

1664748420544.png

These closed door meetings by the Fed happen every month, here's a link to their publicly accessible schedule - https://www.federalreserve.gov/aboutthefed/boardmeetings/meetingdates.htm - not one mention of the word "emergency"

How many times will fuck sticks like Kerry Cassidy, Charles Ward, Phil Fraudlewski, and other clickbait cuckaroos take basic, open source information and try to pass it off as being their magic inside intel potion.

 

Goldhedge

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[Forwarded from CognitiveCarbon Public (Cognitive Carbon)]
1664748585872.png
Emergency Fed meeting (behind closed doors of course) ... Credit Suisse collapse? Result of the Vatican Bank move? What did the Vatican know? Result of China dumping dollars (https://markets.businessinsider.com...ncy-markets-economy-beijing-fed-hike-2022-9)?

 

pmbug

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I forgot where I read this - maybe something Rickards wrote years ago - but Fed meetings aren't really about hashing out policy. That's already decided before the meeting. The meetings are about hashing out the messaging they want to compliment their policy.
 

pmbug

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FYI - Lucas Hood is the name of the lead character in a TV show called Banshee.
 

Zed

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My only issue with this whole thing is that since Powell started hiking they have known that there will come a day that this happens. Therefore they will have approached the authorities with the risk and there should be a plan in place. My point is that this isn't a surprise event so maybe we expect damage but not chaos. We will only get chaos when it is beyond their ability to respond in a meaningful way in a timely fashion.

It will be interesting either way!
 

Unca Walt

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The comparison to Lehman Bros has a problem (although both have the same cause): Lehman Bros. had $659BB hanging out there... and look what happened to the economy then. But Credit Suisse has a world-rocking $1.5TT about to fall into the stank.

Financial houses all over the earth are tangled in this. Add in some money printing by the Fed.
 

pmbug

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... But Credit Suisse has a world-rocking $1.5TT about to fall into the stank. ...
tenor.gif
 

Unca Walt

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Lookin' at it as a whole, *IF* Credit Suisse turns into a gob of Suisse cheese, my guess is it will cause a total disaster for all of Europe <-- They are already in the Fleet Ditch over there with their suicidal nonsense with Russia... so it will be magnified to all of NATO.

[Yoda, Looking Upward] "Rise, the dollar will. Then crash, the dollar will." [/Yoda, Head Down]
 
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