Credit Suisse
We’ve been on the road, this past week, so blogging has been a touch “light on”.
We’ve seen the graphs that killed Silicon Valley Bank, and Signature bank. Mark to market losses on the hold to maturity book, by running a big unhedged asset liability mismatch, more than 90% of deposits uninsured, and concentrated amongst of flighty, suffering, VC and tech firms.
Credit Suisse seemed to catch some unawares (certainly the AT-1 CoCo’s getting zeroed out ahead of equity).
But even a cursory glance at the CS history reveals much. We’ve thought it was going bankrupt each year every year for many years.
Shrinking to attempted greatness, shedding toxic assets, embroiled in never-ending scandals. The basic (though sometimes wrong) idea is that scale begets competitive advantage and returns, in banking, here it is in reverse.
Recall the massive exposure to the Archegos (Bill Hwang’s Private Office fund, borrowing capital to buy tech/VC companies, a little like Cathy Wood’s ARC, that didn’t work out) or to the Lex Greensill Credit Suisse commercial paper debacle. Billions of dollars lost.
The history of losses, one-offs, and abnormal items is really a sight to behold.
CS was essentially a company in “perennial restructure mode”, desperately trying to find the right model.
Depositor flight in the final moments may well have been what “killed it”, but the run up to the loss of confidence took time, and was assuredly steady.
Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.
This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.
Please note that past performance is not a reliable indicator of future performance.
General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.
Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.