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00:00 – Disclaimer
00:20 – Intro
00:30 – Pronunciation
00:50 – Purpose of the rant
01:30 – Into the story
02:16 – I understand people being mad
03:21 – To the point
03:56 – “Bonds” outrage
04:19 – The risk on the 9 billion & 100 billion
04:52 – Credit Suisse AND UBS have to go bankrupt for the 100-200 billion to be issued
05:43 – AT1 bonds working AS THEY ARE SUPPOSED TO
06:00 – The people complaining are not laypeople, they’re financial professionals
06:10 – How AT1 bonds work
06:45 – Let’s talk about why people buy AT1 vs. US treasuries
08:05 – How AT1 securities work
08:45 – What the security was called tells you everything
09:05 – Professional investor tears
09:45 – Reiterating what an AT1 bond is
09:57 – Misunderstanding
10:10 – A practical example of this misunderstanding in my own business
11:30 – What bothers me about the coverage
11:50 – The problem
12:35 – This happened 4 years ago
13:15 – People who know better are crying about this
14:03 – Why the shareholders get paid out before AT1
14:48 – Conclusion
15:10 – Part 2, UBS’ asks
16:10 – Valuations
19:25 – I don’t blame UBS, I blame swiss govt…(read more)
LEARN MORE ABOUT: Bank Failures
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In recent years, we have seen several bank failures, bad investments, and the collapse of AT1 bondholders. These events have greatly impacted the financial world, and it is time to take a closer look at the reasons behind these failures.
Firstly, many banks have made bad investments that have led to their failure. Banks invest in a variety of financial instruments such as stocks, bonds, and derivatives. While these investments can be lucrative, they can also be risky. Banks that take on too much risk by investing heavily in high-risk assets can quickly find themselves in trouble.
Secondly, the collapse of AT1 bondholders has also contributed to bank failures. AT1, or Additional Tier 1, bonds are a type of hybrid security that combines equity and debt. These bonds offer higher returns than traditional debt securities, but they also carry a higher risk. AT1 bonds are often issued by banks to shore up their capital reserves. However, during times of financial stress, these bonds can become worthless, leaving investors with large losses.
Finally, the issue of bank failures is compounded by a lack of accountability. When banks fail, there is often a lack of transparency regarding the causes of the failure. This can lead to a lack of trust in the financial system, which can have a ripple effect on the economy.
There are no easy solutions to these problems, but it is clear that banks need to take a more prudent approach to investing. This means putting in place stringent risk management practices that ensure that investments are made in a responsible and sustainable manner. It also means that regulators need to be more proactive in ensuring that banks are complying with regulations and that they are adequately capitalized.
In conclusion, bank failures, bad investments, and the collapse of AT1 bondholders are serious issues that need to be addressed. It is time for banks to take a more responsible approach to investing and for regulators to be more proactive in ensuring that banks are complying with regulations. Only then can we regain trust in the financial system and avoid the devastating effects of future bank failures.
So do you think UBS pushed for all these conditions in the hope the Swiss government would say no and they wouldn't have to buy this piece of shit?
credit cheese
Louis, I can understand the point about considering the lack of competence and intelligence that can lead people to criticize and complain about issues they objectively should have known.
But I am really skeptical about applying this to the most cynical, ruthless, and manipulative people around who game the system with predictable results. Professional investment brokers and their client base are much more likely to manipulate the political entities into writing off their losses wherever possible.
About the qualification of asset managers: when I got my diploma in 2014 (law specialisation fiscal law) most banks already had stopped hiring people with specialized degrees like me and prefered people without specialized backgrounds (history, social science, teachers of all sorts they could send through their own 'finance academies'. Because these people were far more "easy to manage" meaning: mallable and far less critical). Lots of people in the financial industry have no clue what they are actually peddling.
So yeah, not surprised that a lot of people were caught with their pants down.
I feel as though, when a major business fails such that a government even feels PRESSURE to step in and help out, the top five or ten or hundred executives need their total net worth liquidated, and all but maybe $50,000 used to pay off their company's debts. If CEOs faced that kind of risk, I feel like they wouldn't play such fancy games with the company's finances, and would be more focused on ensuring the company doesn't fail, than making sure profits keep going up quarter over quarter, with a golden parachute in the corner for when it all implodes.
Today, I learned a LOT. Thank you!
Socialism for the rich, and capitalism for the poor.
Look, if I buy a bond, with explicit conditions on that bond that cause it to be marked to zero, and then those conditions happen, and the bond gets marked to zero, surely I have something to complain about?
Your point about the explicitness of the name of the bond is an interesting one. However, there are bonds out there that look vanilla but similarly have both equity conversion and bail in conditions specified in the term sheets. One would hv to assume they would operate in the same way as the CS ones. A couple of other observations… some hv said that it was owing to features of Swiss law that the AT1s operated the way they did in CS… really? I would put it down to a simple, albeit unprecedented, construction of the bond terns and conditions. One that ignored market convention / upended basic company law. I also believe that whilst ppl hv talked about the equity conversion and bail in as the twin culprits in the CS case, to get to the result that eventuated only the bail in needed to be triggered..
That's one hell of a comfortable looking recliner. Anyway, . . . Monopolies. . . Bottom line it's the good convenient excuse of "To Big To Fail"
Exactly they took a (known) risk on high interest bonds and they lost…
A guy in his lounge chair? How is that even bad? I am just here to learn how I'm getting fucked over? These microchips are way over my farmers mind.
The gamblers lost their bet and are upset when they're not bailed out. Why do they think think they were offered a greater return.
That is a 7%bet . Tha if tha bank Daz not have a good yea it . Pics of the money and leave you in witha a veri empti bag hmmm. It sounds to me like a bit more than an investment. The specially for a whole year. I think there's more chances on red black. At list it is 100% and it is in a capal minit. Not a year. But this is not financial advice. And I am no professional in this kind of business or gambling lol . Yea .
What do you mean I'm not guaranteed a return on my highly speculative investments! I went to Harvard business school peasant!
How will I make my yacht payments now?
oh boy
MANGEZ LES RICHES
"Credit Suisse" is a French name, so it follows the French pronunciation rules.
MMTLP. THE BIGGEST FRAUD IN THE STOCK MARKET EVER. Go look it up. Regulators conspired with hedge funds to Robb 65000 retail investors
It’s always the banks isn’t it, always
Ha, your story about dumbass customers to lazy to read a paragraph of info but have plenty of energy to get mad at you really rings true to me. Even a single sentence is tldr for a LOT of people.
Yo, but them Switzerland people are bloody rich.
The Fed is "quantitative tightening" for the masses but “pumping liquidity” for the elites. You see the hypocrisy? The money printers are on. The money printers are on, yet again, for banks. The masses be damned. The people of East Palestine be damned. “Pumping liquidity” is social welfare for the rich. Using euphemisms doesn’t change facts. During the pandemic, crony-capitalists railed against worker unemployment insurance though the government takes that money with each and every paycheck. The money "given" to workers during Covid was payed for by workers, for many of us, for decades. It was our money. If the government squandered unemployment funding, it is not the fault of workers. According to Wall Street, Fox News, and many in Congress, the government was handing out "free" money to lazy workers. “Pumping liquidity into the market" is socialism for the rich. With bank bailouts, twisting words into a pretzel salad by saying that the government isn’t giving free money to the rich is a lie. Banks were not simply "leveraging" money. They were gambling with depositor's money, all legal with the collapse of Glass-Steagall and Dodd-Frank. Some people are now calling the banks, "victims." It's abhorrent. We must separate commercial non-investible banking for depositors from speculative investment banking. When the investment banks go belly up, they eat crow.
fuck em
Great video! I know you're not a financial expert, and I know you're not giving financial advice, but I always like hearing your opinion on these topics, and I think it's good that you're giving this exposure that it otherwise might not have had for people who don't regularly watch financial content.
i dont know Louis, i think someone who survived new york is competent to talk about survival
Banks taking advantage of misunderstanding, investors taking advantage of misunderstanding. Things fail.
Sums up what's happening to the financial sector.
This one was decades in coming. The fact the US bank decided to be stupid at the same time is not related.
So it's not even people's savings they're talking about? It's their investments? Shouldn't the savings be the priority and everything else can go whistle?
The best part about this whole thing is that they could of checked the purchases and sales of the bank and actually had an idea of the risk of it going lower. This is 2008 all over again, the data was there, but the fund managers and banks couldn't be fucked to actually investigate the risk.
SOME of the people complaining about the AT1 bond-writedowns are idiots. Some are just pissed because they thought they'd bribed enough bureaucrats to get a bailout that would cover them.
It's the bank of Switzerland. You know, where the Swiss live… so it's the Bank of the Swiss, Credit Swiss. The stupid spelling is because of the French, who cant spell anything in a sane way, and unfortunately are right next door to Switzerland.
I guess I better take some financial advice from Mr. Rossmann.
WW3 is 100% going down
Push comment incoming.
Protecting the elites
Louis, it's pronounced "credit swəswəswəswə"
I agree 100% It was a 9% return from a zero rate era, they took the risk and lost.
The Swiss goverment did the right choice, if swiss banks loses "swiss banks" the safest world banks in the world status, they will lose everything they build for hundreds of years.
America has an average that would be shocking to people, about 20% of Americans are ILLITERATE and cannot read. There is an even smaller but similar number who are "functionally" illiterate to where they can read but the level is so low that they need assistance to understand moderate to difficult complex statements. Here is just a case of a dumbing down population here and abroad, who just don't want to think or are intentionally not reading so they can feign ignorance and try to graft.
I own shares of USOI, which could also be evaporated as a result of all of this.
I'm just sitting here like John Travolta in Broken Arrow, let's see what happens!
What makes it a high-risk investment? Because on the long term, it's shown to be more likely to make less, so it's more risky. Short term, it might make more.
If, over time, high-risk investments always played out, it would no longer be a high-risk investment.
thanks!
The US taxpayer is now on the hook for over $290,000 in GOVERNMENT DEBT ,
That number is going to be close to $300,000 by the end of this year.
Did I mention the IRS Twitter post?
Making money is an action. Keeping money is behavior. Growing money is knowledge…..
If a bank is "too big to fail" then it is too big. Such banks should be broken up into smaller banks. The competence within a single institution should not be a factor in the entire economy.
Also, when giant companies fund +$50B (or some reasonable number, IDK) projects and expansions, they should have to raise money from multiple banks, who in essence become shareholders of a sort. The risk should be distributed, not concentrated. That way there is competition and more people critically evaluating the endeavor. When they have the requisite amount in loans subscribed, then they all come into existence at once. If they can't get subscribed, then they need to rescope the project and its returns to meet the expectations of the banks. Kind of like crowd sourcing on steroids.
Purchase of AT1 bonds was restricted to “sophisticated” investors. General public could not buy these bonds directly.
PS – UBS only had the weekend to conduct due diligence which is not possible so they had to protect UBS stockholders. It will be interesting to see what the final outcome will be after a few years.