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☆ German 'wise ones' see inflation uptick if banking woes halt rate rises
▼ + stars: | 2023-03-22 | by ( ) www.reuters.com time to read: +2 min

[1/2] Members of the German economic expert council attend a news conference to present the economic prognosis 2022/23, in Berlin, Germany March 22, 2023. "The recent increase in financial market risks has made it more difficult for central banks to fight inflation," the five "wise ones" who advise Berlin on economic policy said in their biannual report. "If the monetary policy response is too weak due to these trade-offs, inflation could remain high for longer than expected or even pick up again," they added. Turmoil in the banking sector culminated in the Swiss regulator-backed takeover of Credit Suisse by rival UBS at the weekend. Inflation will come in at 6.6% in 2023 and 3.0% in 2024, the council predicted.

The Fed's relentless rate hikes to rein in inflation have been partly blamed for sparking the biggest meltdown in the banking sector since the 2008 financial crisis. For now, Credit Suisse's rescue appears to have assuaged the worst fears of systemic contagion, boosting shares of European banks (.SX7P) and U.S. regional lenders. The S&P 500 banks index (.SPXBK) rallied 3.6%, its largest one-day gain since November. Still, Australia's prudential regulator has started asking the country's banks to declare their exposure to startups and crypto-focused ventures following the collapse of Silicon Valley Bank, according to the Australian Financial Review. Market cap of US regional banks included in the S&P 500 regional bank indexDeputy Treasury Secretary Wally Adeyemo said a review of the failures of Silicon Valley Bank and rival Signature Bank was in order.

LONDON, March 21 (Reuters) - Distressed debt investors and large hedge funds are buying up Credit Suisse (CSGN.S) additional tier-1 bonds at rock-bottom prices after they were written down to zero in the Swiss bank's rescue by cross-town rival UBS (UBSG.S). AT1 bonds issued by other European banks tumbled on Monday as the treatment of Credit Suisse AT1 bondholders highlighted the risks of this type of debt. Buyers have included a mixture of hedge funds and deep distressed debt funds, which Southey expected would need to hold the bonds for an extended period before they paid off. Some of those buyers intend to join groups that would litigate to improve odds on cashing in on the bonds, Southey said. "It's quite possible that we will see demand from buyers of subordinated bank debt to have more explicit protections written into these bond prospectuses in the future."

☆ Asia banks may face difficulty bolstering capital via AT1s - Citi
▼ + stars: | 2023-03-22 | by ( ) www.reuters.com time to read: +2 min

The challenge will be particularly acute for a large number of smaller banks in Asia more reliant on AT1s compared with Western peers due to tighter regulatory liquidity requirements. AT1 bonds, which can be converted to equity, rank higher than shares in the capital structure of a bank. The write-down to zero at Credit Suisse will produce the largest loss in the $275 billion AT1 market to date. Citi said in its note it expected the Credit Suisse fallout to trigger re-pricing of AT1 across Asian banks' capital structures. "Regulators may tighten capital and liquidity requirements, which may impact smaller banks more," Citi said in the research note.

☆ Credit Suisse takeover a major blow for Swiss reputation, Sparring Partners CEO says
▼ + stars: | 2023-03-22 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailCredit Suisse takeover a major blow for Swiss reputation, Sparring Partners CEO saysBernhard Bauhofer, founder and CEO of Sparring Partners, discusses confidence in the Swiss banking system following UBS' takeover of Credit Suisse.

☆ Analysis: Credit Suisse collapse threatens Switzerland's wealth management crown
▼ + stars: | 2023-03-22 | by ( John Revill | ) www.reuters.com time to read: +6 min

[1/3] Logos of Swiss banks UBS and Credit Suisse are seen in Zurich, Switzerland March 20, 2023. Switzerland's credibility as a stable, predictable country had been upended by moves like the decision to wipe out the holdings of Credit Suisse bondholders, he said. Under the takeover deal, holders of Credit Suisse AT1 bonds will get nothing, while shareholders, who usually rank below bondholders in compensation terms, will receive $3.23 billion. "In that sense I also see a prosperous future for the financial centre because we have hundreds of very well capitalised banks and very successful wealth management and asset management banks." Reuters Graphics Reuters GraphicsReuters GraphicsOthers were more skeptical about the future, highlighting a reluctance to confront mistakes at Credit Suisse or take responsibility for the aftermath.

HONG KONG, March 22 (Reuters Breakingviews) - Time may be on Richard Li’s side. By cobbling together acquisitions, Li has built a brand to sell life insurance across Hong Kong, Japan and Southeast Asia. The value of new business – a measure of the present value of future earnings from policies signed - rose around 30%. Follow @KatrinaHamlin on TwitterCONTEXT NEWSAsian insurer FWD has made a fresh application for a Hong Kong listing, according to stock exchange filings published on March 13. A first attempt to go public in Hong Kong in 2021 was refused owing to concern over its dual-class shares.

☆ These 10 funds had over $100 million each in Credit Suisse bonds — which are now worth nothing
▼ + stars: | 2023-03-22 | by ( Ganesh Rao | ) www.cnbc.com time to read: +2 min

A number of funds could be facing over $100 million in losses on their Credit Suisse investments after the lender's forced merger with its rival UBS . The funds face losses on Credit Suisse's additional tier-1 bonds (AT1), according to CNBC Pro analysis, after Swiss regulators deemed them worthless as part of the emergency merger . The Swiss regulator FINMA saw the merger between Credit Suisse and UBS as a trigger event to write down 16 billion Swiss francs ($17 billion) worth of the bonds. The following table shows the funds that held AT1 bonds with a par amount of at least $100 million each as of Mar. About 80 funds run either directly by PIMCO or one of its affiliates, held Credit Suisse AT 1 bonds, according to CNBC's analysis.

March 21 (Reuters) - Investors on Tuesday took some heart from the rescue of troubled lender Credit Suisse by its Swiss rival UBS (UBSG.S), though concerns lingered about the risk of shockwaves further damaging credit markets and smaller U.S. banks. "The current situation in U.S. regional banks and Credit Suisse has raised concerns about contagion risk," said Grace Tam, chief investment advisor Hong Kong at BNP Paribas Wealth Management. Credit Suisse CEO Ulrich Koerner, who was expected to attend the conference, however, dropped out and the event was closed to media after the weekend rescue. Shares in First Republic Bank (FRC.N) halved on Monday on worries that last week's $30 billion infusion of capital would not be enough. The regulators said owners of this type of debt would only suffer losses after shareholders have been wiped out - unlike at Credit Suisse, whose main regulators are in Switzerland.

[1/2] The logo of the Swiss bank Credit Suisse is seen in Zurich, Switzerland March 20, 2023. While the nation's central bank and financial regulator publicly declared that Credit Suisse was sound, behind closed doors the race was on to rescue the nation's second-biggest bank. The Swiss National Bank declined to comment while the finance ministry did not respond to a request for comment. Battered by years of scandals and losses, Credit Suisse for months had been battling a crisis of confidence of its own making. By Wednesday, two days later, Credit Suisse was swept up in a full-blown crisis.

☆ Analysis: Market turmoil is doing central bankers' jobs for them
▼ + stars: | 2023-03-21 | by ( Yoruk Bahceli | ) www.reuters.com time to read: +5 min

European Central Bank President Christine Lagarde reckons market turmoil may do some of the ECB's tightening for it if it dampens demand and inflation. Financial conditions reflect the availability of funding in an economy, so they dictate spending, saving and investment plans of businesses and households. Central banks have been trying to tighten them by raising rates to slow rising prices. Signs of tightening financial conditions were plentiful. "Central banks no longer have a good idea about the true tightness of monetary policy," he said.

☆ Everything you need to know about UBS's historic $3 billion deal to rescue rival bank Credit Suisse
▼ + stars: | 2023-03-21 | by ( George Glover | ) www.businessinsider.com time to read: +6 min

UBS agreed to buy its longtime rival Credit Suisse for $3 billion on Sunday. There's one big winner — and lots of losers — from the Credit Suisse rescue deal. The deal announced Sunday afternoon valued Credit Suisse shares at just 0.76 Swiss francs, one-fifth of the price the Saudi National Bank paid. Lastly, the merger between UBS and Credit Suisse could be bad news for the Fed. Here's how the Credit Suisse rescue deal impacts the central bank.

☆ Credit Suisse bondholders prepare lawsuit after contentious $17 billion writedown
▼ + stars: | 2023-03-21 | by ( Elliot Smith | ) www.cnbc.com time to read: +3 min

A sign of Credit Suisse bank is seen at their headquarters in Zurich on March 20, 2023. A number of Credit Suisse bondholders said Tuesday that they were considering legal action after $17 billion of the bank's additional tier-one (AT1) bonds were wiped out as part of its emergency sale to UBS . David Benamou, chief investment officer at Axiom Alternative Investments and a holder of Credit Suisse AT1 bonds, told CNBC on Tuesday that he would be joining the lawsuit along with, he imagined, "probably most bondholders." Was Credit Suisse failing? The Credit Suisse write-down represents the largest loss ever inflicted on AT1 investors since their inception.

☆ 'A financial banana republic': UBS-Credit Suisse deal puts Switzerland's reputation on the line
▼ + stars: | 2023-03-21 | by ( Sam Meredith | ) www.cnbc.com time to read: +4 min

Fabrice Coffrini | Afp | Getty Imageswatch now"The Credit Suisse debacle will have serious ramifications for other Swiss financial institutions. A country-wide reputation with prudent financial management, sound regulatory oversight, and, frankly, for being somewhat dour and boring regarding investments, has been wiped away," Marenzi said. Credit Suisse traded up 3.5% during afternoon deals after ending Monday's session down a whopping 55%. Credit Suisse bond wipeoutUnder the terms of the emergency takeover, investors in Credit Suisse's additional tier-one bonds — widely regarded as a relatively risky investment — will see the value of their holdings slashed to zero. One euro was last seen trading at 0.9961 Swiss francs, weakening from 0.9810 when compared with March 14.

☆ Canada's banking regulator reaffirms creditor hierarchy after Credit Suisse deal angers bondholders
▼ + stars: | 2023-03-20 | by ( ) www.reuters.com time to read: +1 min

March 20 (Reuters) - Canada's banking regulator said on Monday that those who hold Additional Tier 1 (AT1) and Tier 2 debt will be entitled to a more favorable outcome if a bank runs into trouble. If a bank reaches the point of "non-viability", common shareholders of the bank will be the first to suffer losses, the Canadian regulator said. It means AT1 bondholders appear to be left with nothing while shareholders, who usually rank below bondholders in terms of who gets paid when a company collapses, will receive $3.23 billion under the deal. Lawyers from Switzerland, the United States and UK are talking to a number of Credit Suisse AT1 bond holders about possible legal action, law firm Quinn Emanuel Urquhart & Sullivan said on Monday. ($1 = 0.9285 Swiss franc)Reporting by Niket Nishant in Bengaluru; Editing by Shounak DasguptaOur Standards: The Thomson Reuters Trust Principles.

LONDON, March 20 (Reuters) - Bank of America's electronic stocks desk has halted trading with a desk at Credit Suisse that uses computer-led strategies, "out of an abundance of caution effective today," an email seen by Reuters on Monday said. Bank of America (BAC.N) said it would no longer send trades to Credit Suisse's "ATS Crossfinder". That trading platform anonymously matches buy and sell orders for the same kinds of securities, according to the Credit Suisse (CSGN.S) website. Bank of America sent the email to traders and hedge fund clients on Monday morning. Credit Suisse declined to comment on the email and Bank of America also declined to comment.

March 20 (Reuters) - Shares of U.S. lender First Republic tumbled nearly 50% on Monday on fears it will need a second rescue to stay afloat, bucking a broader rally in bank shares driven by UBS Group's state-backed takeover of Credit Suisse. "First and foremost, the Credit Suisse, UBS merger certainly takes a lot of stress out of the global banking system." The 3 billion Swiss franc ($3.2 billion) deal for the troubled Swiss bank - which was once worth more than $90 billion - was engineered by Swiss regulators and announced on Sunday. European bank shares (.SX7P) rebounded from recent losses, while on Wall Street the S&P 500 banks (.SPXBK) index recovered 0.6%. [1/2] Buildings of Swiss banks UBS and Credit Suisse are seen on the Paradeplatz in Zurich, Switzerland March 20, 2023.

Some $17 billion worth of AT1 Credit Suisse bonds will be written down to zero on the orders of the Swiss regulator as part of a rescue merger with UBS (UBSG.S). Under the deal, holders of Credit Suisse AT1 bonds will get nothing, while shareholders, who usually rank below bondholders in terms of who gets paid when a bank or company collapses, will receive $3.23 billion. AT1 bonds issued by other European banks fell sharply on Monday as the treatment of Credit Suisse AT1 bondholders highlighted the risks of investing in this type of debt. AT1 bonds act as shock absorbers if a bank's capital levels fall below a certain threshold. Meanwhile, law firm Quinn Emanuel Urquhart & Sullivan said it was talking to a number of Credit Suisse AT1 holders about possible legal action.

☆ Credit Suisse’s Death Gives Birth to New Type of Bank Crisis
▼ + stars: | 2023-03-20 | by ( Stephen Wilmot | Telis Demos | ) www.wsj.com time to read: 1 min

With Credit Suisse , investors just got their first, messy view of what happens when a big global bank fails in the post-2008 era. UBS agreed to buy its local rival over the weekend in a historic deal brokered by Swiss regulators. Credit Suisse shareholders will get UBS shares that were worth the equivalent of about $3.25 billion before the market opened on Monday, and less after the acquirer’s stock fell about 5% on Monday morning. Credit Suisse had a market value of some $8 billion at the end of last week and a tangible book value of $45 billion.

☆ Possible legal action by some Credit Suisse AT1 bondholders discussed - law firm
▼ + stars: | 2023-03-20 | by ( ) www.reuters.com time to read: +1 min

LONDON, March 20 (Reuters) - A team of lawyers from Switzerland, the United States and UK are talking to a number of Credit Suisse (CSGN.S) Additional Tier 1 (AT1) bond holders about possible legal action after the state-backed rescue of Credit Suisse by UBS wiped out AT1 bonds, law firm Quinn Emanuel Urquhart & Sullivan said on Monday. Quinn Emanuel said they are in discussions with Credit Suisse AT1 bond holders representing a "significant percentage" of the total notional value the instruments. Just over $17 billion worth of Credit Suisse bonds, known as Additional Tier 1 or AT1, debt will be written down to zero on the orders of the Swiss regulator as part of a merger. A call for bondholders is likely to be convened to take place on Wednesday, 22 March, Quinn Emanuel said. Reporting by Chiara Elisei and Karin Strochecker; Editing by Dhara RanasingheOur Standards: The Thomson Reuters Trust Principles.

The Credit Suisse rescue has shaken the European banking sector and fears of wider fallout remain. Under the Credit Suisse rescue deal, 16 billion Swiss francs worth of Credit Suisse Additional Tier 1 debt will be written down to zero on the orders of the Swiss regulator. Overall, bank debt remained under pressure, with the cost of insuring exposure to the debt rising in the credit default swaps (CDS) market. CONTAGION RISKThe wipeout of AT1 bonds in the Credit Suisse rescue has alerted fixed income investors to the risks of investing in these instruments. At Credit Suisse, the bank's AT1 bonds were bid as low as 1 cent on the dollar on Monday as investors braced for the wipeout.

FRANKFURT, March 20 (Reuters) - European supervisors tried to stop a rout in the market for convertible bank bonds on Monday, saying owners of this type of debt would only suffer losses after shareholders have been wiped out - unlike what happened at Credit Suisse (CSGN.S). Regulators in the European Union and Britain were reacting to a decisions by Swiss authorities to write off Credit Suisse's Additional Tier 1 (AT1) bonds even as stockholders received shares in UBS (UBSG.S). The EU regulators - the European Central Bank, the European Banking Authority and the Single Resolution Board - said they would continue to impose losses on shareholders before bondholders. The comments helped the price of bank bonds cut losses and were echoed by the Bank of England shortly after. Credit Suisse's AT1 bonds contained a clause allowing Swiss authorities to write them off if the bank became unviable, regardless of what happens to the shares.

In a package engineered by Swiss regulators on Sunday, UBS Group AG (UBSG.S) will pay 3 billion Swiss francs ($3.2 billion) for 167-year-old Credit Suisse Group AG <CSGN.S>, which was once worth more than $90 billion. European bank shares inched into positive territory (.SX7P) while shares in U.S. financial giants Citigroup (C.N) and JPMorgan Chase (JPM.N) rose 1.2% and 0.7% respectively. Investor focus had shifted to the massive blow some Credit Suisse bondholders will take, a new worry in a rolling banking sector crisis sparked by the collapse of midsize-U.S. lenders Silicon Valley Bank (SVB) and Signature Bank (SBNY.O) earlier this month. [1/2] Buildings of Swiss banks UBS and Credit Suisse are seen on the Paradeplatz in Zurich, Switzerland March 20, 2023. QUESTIONS FOR UBSThe deal to buy Credit Suisse will make UBS Switzerland’s only global bank and the Swiss economy more dependent on a single lender.

☆ Boaz Weinstein's trade looks set to flourish on Credit Suisse demise
▼ + stars: | 2023-03-20 | by ( Nell Mackenzie | ) www.reuters.com time to read: +3 min

[1/2] Boaz Weinstein, founder and chief investment officer at Saba Capital Management, speaks during the SALT conference in Las Vegas, Nevada, U.S. May 17, 2017. REUTERS/Richard BrianLONDON, March 20 (Reuters) - Hedge fund manager Boaz Weinstein pinned hopes on Credit Suisse's survival, but also money on its demise. At the time Weinstein told Reuters he thought the derivatives were mis-priced because he believed Credit Suisse's problems would be resolved, either way, more quickly. As the trade is both long and short, Weinstein stands to profit from the short leg of his trade much more than he will lose from the long side. Weinstein led a proprietary trading fund at Deutsche Bank which was spun out to start Saba Capital Management in 2009.

In a package engineered by Swiss regulators on Sunday, UBS will pay 3 billion Swiss francs ($3.23 billion) for 167-year-old Credit Suisse Group AG (CSGN.S) and assume up to $5.4 billion in losses. Investor focus has now shifted to the massive blow some Credit Suisse bondholders will take, adding to anxiety about other banking sector risks including contagion and the fragile state of U.S. regional lenders. UBS acquiring Credit Suisse for 3 billion francs a week ago would have seemed like a terrific deal. Buildings of Swiss banks UBS and Credit Suisse are seen on the Paradeplatz in Zurich, Switzerland March 20, 2023. QUESTIONS FOR UBSThe deal to buy Credit Suisse will make UBS Switzerland’s only global bank and the Swiss economy more dependent on a single lender.

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