UBS in talks to acquire Credit Suisse | Hacker News Reader

UBS in talks to acquire Credit Suisse

ft.com

There are conflicting reports. A NZZ opinion piece[1] claims that a take over would be unlikely as UBS has dissolved most of their investment banking and taking over CS would pull them back in. Then again the new CS leadership has been refocusing the bank away from investment banking as well but that has only been a short period of time.

According to SRF there are talks between UBS, CS and the SNB. [2]

[1] https://www.nzz.ch/meinung/warum-die-ubs-nicht-mit-der-cs-in...

[2] https://www.srf.ch/news/wirtschaft/cs-turbulenzen-medien-ubs...

I wonder if UBS is being pushed into it behind the scenes. There are many less savory possible buyers, so I could see UBS being incentivized into action.

> are many less savory possible buyers

Are there?

Deutsche Bank comes to mind.

UBS is Swiss. That probably has something to do with talks of acquisition of the second largest Swiss bank.

Probably middle eastern funds and governments.

Debit Suisse lived on a bit too long for what they’ve been doing. No wonder the Swiss politicians don’t want to bail them out.

Credit Suisse should definitely be bankrupt. Every major banking scandal over the last decade has happened there. Absolutely zero internal controls and zero risk management, it's absurd they've lasted this long.

> Every major banking scandal over the last decade has happened there.

That's not fair. Deutsche Bank is going to feel forgotten and slighted.

> Credit Suisse should definitely be bankrupt

They should be broken up. Anyone judging the organization as a whole is seeing cohesion where there is none.

Credit Suisse is practically bankrupt. Their market value is practically zero now.

> it's absurd they've lasted this long.

Isn't cheap interest great? You don't even have to be good at what you're doing. Just stand in the cut and profit.

Wasn't that Deuchebank?

I like Debit Emmentaler better.

The recent line of credit is not a bail out?

Makes sense, they can combine their money laundering expertise.

Why are mergers the go-to solution for rescuing banks? Why do they think that, rather than "arrest[ing the] collapse in confidence in Credit Suisse," a merge won't just cause a similar collapse in confidence for UBS too?

Probably worth going through all the options for distressed banks:

-1. Sell distressed assets (Treasuies?) into the market to meet withdrawals. This is bad, in the sense that it converts an unrealized loss into a realized one, and if allowed to continue will shortchange a depositor.

0. Sell the company, and use the proceeds to pay off bond holders, and maybe shareholders if lucky. Merger is basically a fast track version of this.

1. Raising more equity. Dilutes existing shareholders but sometimes something is better than nothing. Usually pretty slow, but I bet you could get a direct listing done quick. Arguably announcing a new raise is what caused the SVB run.

2. Issuing corporate debt / bonds. You'd have to be a special kind of person to buy bonds from a failing bank: limited upside, tons of risk.

3. Attracting / retaining deposits. You can raise rates to retain people, but its very much the same problem as bonds, just slightly less risk of being zeroed out. You can hook up to deposit brokers, but there are rules around them because one decision maker behind millions of deposits is destablizing. Seems like a solution you can only apply before the problem is severe.

4. Sell pieces of the bank / accounts. Retail deposits are valuable in the sense that they are a very cheap source of money for banks. But you kinda have to sell _all_ the accounts, or theres a buyer-seller information asymmetry that Akerlof wrote about. Even if you solve the lemon market dilemma, you are selling a cheap funding source, and need to borrow elsewhere to replace the funding source.

AFAICT, what happens is deposit insurers, bond holders and the potential acquirers sit in a locked room look at financial statements and try to make a guess at how much money the insurers need to pay to get some acquirer to agree to buy the whole bank, with as little disruption to depositors as possible.

When debt is still collectible at maturity, what you really need is a bigger balance sheet to reach maturity....

My non expert understanding is that it allows the bank equity to be haircut assuming there is enough equity to cover the losses. If there isn’t enough equity, then the merger wouldn’t go through.

all banks have an interest in reassuring people that putting your money in a bank is a good idea. letting a bank fail does the opposite of that.

And a bank deliberately taking on bad assets also does the opposite of that.

Maybe the good idea needs to stop being perpetrated.

Not sure if anyone here appreciates leftist news, but someone called into the Majority Report recently predicting Credit Suisse would fold next. As a normal person I found his comments on regional bank stability interesting.

"flashback: Caller Predicted Credit Suisse Would Be Next To Fall" https://www.youtube.com/watch?v=DDFKvzXdLcA

(Not a banker, so maybe lots of people expected this?)

That channel doesn't meet any normal global definition of 'leftist', the global left generally not being onboard with investment capitalism as the driving engine of the economy. Also, the left isn't afraid to discuss petrodollar recycling - i.e. it was the Saudis who refused to keep pouring their petrodollars into Credit Suisse, and Saudi Arabia and Qatar are the top investors in Credit Suisse.

https://www.cnbc.com/2023/01/24/qatar-doubles-credit-suisse-...

This Credit Suisse story might have some connection to the China-sponsored restoration of diplomatic and economic ties between Saudi Arabia and Iran a week ago, perhaps.

I should have qualified it as American leftist perhaps...

CS has been a slow motion crash since 2007. It's a running joke in finance, from FT to ZH.

Honestly I don't read much about banks. What's wrong with CS now, and why is everyone in this thread suggesting they're bad actors?

Credit Suisse has a century-long resume of working with evil people to hide money, from Nazis and genocidal dictators to drug lords. On the other side, their business is fairly weak: they aren't well-known for their trading or investment banking prowess, and the few people they have in that area aren't good. Most of the other banks have adapted to have both wealth management and a sales and trading arm. Credit Suisse only really has wealth management.

It turns out there's a really big synergy here: having an investment banking division helps get your wealth management clients unique deals that are usually very profitable. This means that the other banks can essentially out-compete CS, since their clients don't get the same kinds of deals. Combine that with the reputation and there's not much reason to do business with them.

> they aren't well-known for their trading or investment banking prowess

Actually, back in the very late 1990s i worked for Credit Suisse Financial Products in London, which was a spinoff company from CS and did complicated derivatives and such. It was quite well thought of back then - no idea now, or even if it exists. Everyone at CSFP thought the parent bank was a pile of poo.

CSFP appears to have been defunct for decades. If you look at BrokerCheck, their license in the US expired in 1999.

With my brother, probably.

> Combine that with the reputation and there's not much reason to do business with them.

On the contrary, I think that's EXACTLY why the kinds of clients they have choose to do business with them. If there wasn't already a Credit Suisse serving those types of clients, someone would invent one.

I agree, you don't even have to be a drug lord or the hand of the king

How many times has a bank made something inconvenient for you just because of a skittish interpretation of a fraud or money laundering law?

Criminal banks don’t make things inconvenient for you. Get a criminal bank, the settlements are advertisement.

HSBC is their competition for that niche, and has a good investment banking arm, too.

Credit Suisse is full to the brim with bad dudes. Do you still they'll disappear just because the bank got acquired?

They're not sending their best

If UBS is smart they won't be there...

The two rival banks have a lot in common, essentially identical cultures and similar scandals (though arguably CS has been more poorly run in recent years). Current CEO at CS ran a big part of UBS before taking the top job

Weird how this thread gained traction, but none of the recent SVB posts did

Dozens did. Below are some of the major ones. https://news.ycombinator.com/item?id=35096877 in particular ("FDIC Takes over Silicon Valley Bank") was on the front page for 29 hours and is the 24th most upvoted HN story of all time: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que.... It was #23 before GPT-4 came out :)

(The actual weird thing is—and I don't mean to pick on you at all! it's a widespread phenomenon and genuinely weird—how common it is for a story to be prominent on HN and yet many readers still miss it.)

How Silicon Valley Bank Avoided Oversight - https://news.ycombinator.com/item?id=35168808 - March 2023 (117 comments)

Update from Silicon Valley Bridge Bank CEO - https://news.ycombinator.com/item?id=35161247 - March 2023 (58 comments)

Silicon Valley’s Titans Are Realizing a Lot of People Don’t Like Them - https://news.ycombinator.com/item?id=35156560 - March 2023 (57 comments)

Silicon Valley, once the underdog, is now too big to fail - https://news.ycombinator.com/item?id=35152613 - March 2023 (89 comments)

The fall of SVB and how I tried to save as many straps as I could - https://news.ycombinator.com/item?id=35151009 - March 2023 (78 comments)

SVB insider says employees are angry with CEO - https://news.ycombinator.com/item?id=35142628 - March 2023 (158 comments)

SVB collapse: Peter Thiel’s role scrutinized as spark of bank run - https://news.ycombinator.com/item?id=35141775 - March 2023 (269 comments)

The Tantrum Venture Capitalists Threw over Silicon Valley Bank - https://news.ycombinator.com/item?id=35139383 - March 2023 (124 comments)

SVB shows that there are few libertarians in a financial foxhole - https://news.ycombinator.com/item?id=35138341 - March 2023 (471 comments)

SVB's programmatic payment systems are back online - https://news.ycombinator.com/item?id=35136915 - March 2023 (65 comments)

Ask HN: Post-SVB, what are other areas where groupthink leaves us vulnerable? - https://news.ycombinator.com/item?id=35135674 - March 2023 (78 comments)

The End of Silicon Valley (Bank) - https://news.ycombinator.com/item?id=35134608 - March 2023 (136 comments)

HSBC Purchased Silicon Valley Bank UK (SVB UK) for $1.21 (£1) - https://news.ycombinator.com/item?id=35133911 - March 2023 (52 comments)

HSBC to Buy UK Arm of Silicon Valley Bank - https://news.ycombinator.com/item?id=35132181 - March 2023 (146 comments)

Silicon Valley Bank Depositor Bailout Makes Mockery of ‘Too Big to Fail’ - https://news.ycombinator.com/item?id=35131949 - March 2023 (68 comments)

Investor Mark Suster says a “handful” of bad actors in VC destroyed SVB - https://news.ycombinator.com/item?id=35131095 - March 2023 (75 comments)

When did SVB insiders begin to realize they were in trouble? - https://news.ycombinator.com/item?id=35130261 - March 2023 (233 comments)

US Says All SVB Deposits Safe, Creates New Backstop for Banks - https://news.ycombinator.com/item?id=35128313 - March 2023 (55 comments)

OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse - https://news.ycombinator.com/item?id=35125479 - March 2023 (118 comments)

Fed and FDIC discussing backstop to make SVB depositors whole, stem contagion - https://news.ycombinator.com/item?id=35124431 - March 2023 (88 comments)

SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC - https://news.ycombinator.com/item?id=35122313 - March 2023 (187 comments)

FDIC auction for SVB said to be underway, final bids due Sunday - https://news.ycombinator.com/item?id=35121967 - March 2023 (235 comments)

Peter Thiel's Founders Fund pulled cash from SVB before collapse: Report - https://news.ycombinator.com/item?id=35120773 - March 2023 (160 comments)

Silicon Valley Bank Failure [pdf] - https://news.ycombinator.com/item?id=35120416 - March 2023 (145 comments)

Yellen says government will help SVB depositors but rules out bailout - https://news.ycombinator.com/item?id=35119825 - March 2023 (1410 comments)

First Republic, other regional bank stocks sink after failure of SVB - https://news.ycombinator.com/item?id=35119159 - March 2023 (109 comments)

SVB chief pressed Congress to weaken risk regulations - https://news.ycombinator.com/item?id=35118944 - March 2023 (103 comments)

Ask HN: What US bank post-SVB would you recommend? - https://news.ycombinator.com/item?id=35118725 - March 2023 (64 comments)

An open-source database of companies affected (or not) by the collapse of SVB - https://news.ycombinator.com/item?id=35116107 - March 2023 (57 comments)

FDIC – SVB FAQ - https://news.ycombinator.com/item?id=35116003 - March 2023 (260 comments)

SVB lobbied the government to relax some Dodd-Frank provisions - https://news.ycombinator.com/item?id=35115963 - March 2023 (192 comments)

Silicon Valley Bank paid out bonuses hours before seizure - https://news.ycombinator.com/item?id=35112827 - March 2023 (80 comments)

SVB does not deserve a bailout. They DID NOT hedge interest rate risk at all - https://news.ycombinator.com/item?id=35112818 - March 2023 (83 comments)

An Update on USDC and Silicon Valley Bank - https://news.ycombinator.com/item?id=35112336 - March 2023 (198 comments)

Etsy Delays Seller Payouts Due to Run on Silicon Valley Bank - https://news.ycombinator.com/item?id=35111492 - March 2023 (91 comments)

SVB Financial: Blow Up Risk (2022) - https://news.ycombinator.com/item?id=35110348 - March 2023 (68 comments)

SVB chief pressed lawmakers to weaken bank risk regulations - https://news.ycombinator.com/item?id=35108732 - March 2023 (93 comments)

Startups that use Silicon Valley Bank are freaking out over payroll - https://news.ycombinator.com/item?id=35108635 - March 2023 (106 comments)

A SVB short seller explains red flags he saw months ago - https://news.ycombinator.com/item?id=35105418 - March 2023 (180 comments)

$3.3B of the ~$40 billion of USDC reserves remain at SVB - https://news.ycombinator.com/item?id=35104866 - March 2023 (166 comments)

SVB depositors, investors tried to pull $42B Thursday - https://news.ycombinator.com/item?id=35104396 - March 2023 (199 comments)

What does Silicon Valley Bank’s collapse mean for the financial system? - https://news.ycombinator.com/item?id=35102795 - March 2023 (316 comments)

SF payroll firm Rippling has to delay payouts after Silicon Valley Bank collapse - https://news.ycombinator.com/item?id=35102454 - March 2023 (121 comments)

Roku filed an 8-K saying that of its $1.9B of cash, $487M is stuck at SVB - https://news.ycombinator.com/item?id=35102339 - March 2023 (213 comments)

Emergency bridge loan for SVB customers - https://news.ycombinator.com/item?id=35102196 - March 2023 (162 comments)

The collapse of SVB exposes the largest crack in the economy - https://news.ycombinator.com/item?id=35101102 - March 2023 (290 comments)

30% of YC companies exposed through SVB can’t make payroll in the next 30 days - https://news.ycombinator.com/item?id=35100743 - March 2023 (377 comments)

The Demise of Silicon Valley Bank - https://news.ycombinator.com/item?id=35098607 - March 2023 (129 comments)

FDIC Takes over Silicon Valley Bank - https://news.ycombinator.com/item?id=35096877 - March 2023 (1576 comments)

SVB in talks to sell itself after attempts to raise capital fail - https://news.ycombinator.com/item?id=35094466 - March 2023 (293 comments)

Bank run on Silicon Valley Bank - https://news.ycombinator.com/item?id=35086836 - March 2023 (834 comments)

Startup lender Silicon Valley Bank to sell stock to cope with cash burn - https://news.ycombinator.com/item?id=35083587 - March 2023 (91 comments)

Sorry for all the effort of posting the links but I meant very recent: the bankruptcy filing of the parent company. Though tbh I have no idea if that’s actually newsworthy - but it made main news outlets

Edit: and I certainly didn’t miss the original posts :D

No worries! it was mildly amusing finding all those links.

Debit Emmental

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