Category Credit Suisse

May 5 2023

The California Contagion – PacWest Teters on Becoming the Next Regional Bank to Collapse as Regional Banking Stocks Continue Severe Drops


Posted originally on the CTH on May 4, 2023 | Sundance 

According to those who relish the Cloward-Piven strategy, things are proceeding swimmingly.

…”As long as the decisionmakers continue doing the things that are creating the crisis, the crisis will continue.”

Federal Reserve Chairman Jerome Powell said yesterday the “U.S banking system is sound and resilient,” insert uncomfortable snicker here.  However, uncertainty is continuing to pummel the banking industry, despite assurances from the Fed, Treasury, FDIC financial regulators and bankers such as Jamie Dimon who are all saying there is no crisis in the banking industry.

If you want to know the big picture source of the uncertainty, it’s the great pretending.  The average person can sense something is wrong, and the person who pays attention has the experience of institutional lying over the past several years.  The last ten years of lying and pretending has created the biggest collapse in institutional trust in U.S. history.

Russians interfered with the election – trust us. Stick this needle in your arm, it’s safe – trust us.  The FBI are the good guys – trust us. Biden won more votes – trust us. This inflation is merely transitory – trust us.

See the problem?

So, when the same voices shout, “the banking industry is sound, trust us,” well,… yeah, that suspicious cat sense that’s on high alert isn’t buying the chorus.

Reasonably intelligent people who accept things as they are, not as they would have us pretend them to be, can see the core connection to the World Economic Forum, Central Banks, and western globalist policy to change the entire dynamic of economics and finance around the “Climate Change” agenda, or Build Back Better, or Green New Deal.

Overlay that commonsense and pragmatic outlook with the logical consequences of the activity, and this banking collapse issue is a self-fulfilling prophecy.  As long as the decision makers continue doing the things that are creating the crisis, the crisis will continue.

(Via Wall Street Journal) – Regional-bank stocks tumbled Thursday despite assurances from the Federal Reserve that the banking system is on solid footing.

PacWest Bancorp PACW -47.04%decrease; red down pointing triangle, which has been hit hard since the collapses of several banks, dropped by about 40%. The stock started falling in after-hours trading Wednesday evening, after a report that it was considering selling itself.

PacWest said in a statement after midnight Eastern Time Thursday that its core customer deposits were up since the end of the first quarter, and that it hadn’t experienced any unusual deposit flows since the collapse of First Republic.

[…] Investors have been wondering how much further the problems in regional-banking could spread, and whether they will spill over to the broader economy. Some analysts said the decline in PacWest and others reflected the market’s tendency to view news as categorically good or bad, rather than worries about PacWest specifically. Western Alliance, another bank whose stock has been hit hard, fell by about 35%.

[…] Regional banks, as major lenders to businesses and families across the U.S., also tend to fall when investors are expecting a recession. The 10-year Treasury yield slipped this week, and Brent crude hit a 52-week low on Wednesday.

[…] On Wednesday afternoon, the Fed said the U.S. banking system “is sound and resilient,” echoing language from its March statement. Fed Chair Jerome Powell added then that deposit flows at banks had eased and that this week’s seizure and sale of First Republic should further stabilize the industry.

[…] PacWest shares were recently trading around $3.70, putting them on track for their lowest close on record. The stock has now lost some 85% of its value since March 8, the day that SVB spooked bank investors by announcing a loss and a planned capital raise.

Many of PacWest’s customers are tied to technology startups—a tightknit clientele that pulled from high-balance accounts en masse at Silicon Valley Bank before it failed. (more)

Mar 25 2023

Credit Suisse Banking Crisis


Armstrong Economics Blog/Banking Crisis Re-Posted Mar 24, 2023 by Martin Armstrong

It is refreshing when you actually find a journalist who is honest and is not being included by the Neocons to put out their propaganda. Her review of Credit Suisse is a worthwhile read. Especially when this is not over yet and the winds of finance are now turning toward questioning Deutsche Bank.

Izabella Kaminska is senior finance editor at POLITICO Europe.

Over the span of 10 days, the global financial system was once again shaken.

The time frame between the collapse of Californian lender Silicon Valley Bank, America’s 16th largest bank, and that of the 167-year-old lender Credit Suisse was approximately just that — 10 days.

And as we witness the fallout, so far it appears contained. Stock markets are up, bank stocks seem stabilized and government bonds are in high demand. Officials reassure ad nauseam that the financial system remains strong and stable.

But the truth is, even if so, what happened in this period of time has changed the financial system forever — and worryingly, most people haven’t even noticed.

Governments and central banks would have you believe that in both cases, private sector solutions were found to resolve the failures. No taxpayer funds were used.

But that is likely not true.

In the United States, growing calls from the country’s top billionaires and hedge fund bosses to guarantee the full extent of customer deposits would, if acted on, deliver a backstop that must be underwritten by public funds. That’s the case even if costs are distributed among whatever healthy banks remain later. The sums involved are eye-watering — by some measures up to $17 trillion of unfunded liabilities.

If the rule is passed — and all indications are that it will be — this would finally make the implicit explicit: that the financial system was never really rescued following the 2008 financial crisis but merely put on life-support. And that has now failed, which means socialization of the losses beckons.

Over in Europe, things are potentially worse. This time, it wasn’t the storming of the Winter Palace Hotel in Gstadt that seized the means of financing but something far more mundane: an untidy bank resolution for Credit Suisse, which relies far too heavily for comfort on Swiss National Bank (SNB) guarantees.

As one former top British central banker told POLITICO, “They could have used bail-in; it would have worked; and banking would become part of a capitalist market economy” — a reference to the loss-absorbing processes regulators came up with after 2008 to ensure bank failures didn’t have to draw on public resources ever again. “The only stable equilibrium is one where bank resolution works, or socialism,” he added.

But the resolution didn’t work. And investors are belatedly realizing this.

Key to this reality is that Credit Suisse was a bank considered to be in good condition and solvent by all regulatory measures. As one bank analyst told POLITICO, going by the assets, you would never have seen the problem coming. Even the SNB and financial markets regulator FINMA said so as recently as last week.

The SVB Private logo is displayed on an ATM outside of a Silicon Valley Bank branch in Santa Monica, California | Patrick Fallon/AFP via Getty images

So were the regulators lying? Or is the accounting somehow fundamentally broken?

What we know for sure is that markets questioned the numbers, and this was evidenced by a run on the bank’s deposits, equity and bonds. And the discrepancy poses a big problem going forward, as it knocks trust in the accounting of all similarly assessed banks, which, thanks to international accounting standards, means pretty much all of them.

Credit Suisse’s sale to domestic rival UBS at cents on the dollar of what regulators claim the underlying assets are worth presents another problem too. If similar assets are lurking in UBS’ own balance sheet — and chances are that is the case, as the assets in question are probably government bonds — they might have to be written down to a similar degree. This is probably why UBS needed the guarantee from the SNB to be doubled to 100 billion Swiss francs to do the deal.

In light of this, Switzerland now faces an even larger issue: If UBS were to become stressed — and it very well could due to this discrepancy — there’s no private sector pathway for resolution left. The country now only has one major bank and, thus, only two possible pathways to deal with a failure — nationalization or acquisition by a foreign buyer with enough cash to keep the valuation of all the consolidated assets at a price that brings everything back to par. And there are few of those in the Western hemisphere.

With a full foreign acquisition off the table due to global discord, this leaves only an unthinkable solution for the home of Swiss private banking — the dawn of a type of finance more commonly seen in communist countries, where banks are directed by the state to allocate funds to activities they prioritize. Combined with a central bank digital currency, this would reduce banks to mere proxies of the state, with uncertain consequences for efficient capital allocation and inflation.

How things would unfold from then on is unclear. The only thing we can be sure of is that nothing in banking, or capitalism, may ever be the same again.

Mar 22 2023

The Banking & Debt Crisis Continues


Armstrong Economics Blog/Banking Crisis Re-Posted Mar 22, 2023 by Martin Armstrong

The banking crisis continues and it is impacting funds that have been buying bonds. Allianz, a subsidiary of Pimco, is writing off countless millions with Credit Suisse bonds. The banking crisis has been the result of artificially low-interest rates for far too long and banks were used to free money and buy long-term bonds all because they were making their money on the spread. Now that rates are rising, their risk management was effectively nonexistent, and thus the losses and widespread.

The Allianz subsidiary Pimco is one of the largest asset managers in the world. They have to now write off a loss in Credit Suisse bonds and it’s ain’t over yet as we head into April 10th.

Mar 20 2023

This Just In – Western Nation Central Banks Organize to Provide Daily Liquidity of Dollars in The Event of Contagion Bank Collapse


Posted originally on the CTH on March 19, 2023 | Sundance 

This is rather remarkable and tells us something about the current status of the “western” financial system.  The last sentence in today’s announcement from the FED is particularly laughable.   Check this out [Source]:

That last sentence is nonsense.   When was the last time the ‘central banks’ worried about the supply of credit to households and businesses?  Total and complete nonsense. What they are worried about is the need to have readily available dollars, faster, to backstop banks that are supposed to be holding deposits.

Nothing quite inspires ‘global banking confidence’ like the need to swap dollars rapidly, from country to country on a daily basis, because the amount of currency in bank, within any western nation, at any given time, might disappear.

Yesterday’s monologue from Neil Oliver, and the recent personal banking story that structures his comments, is standing as eerily prescient right now.  SEE BELOW:

https://youtube.com/watch?v=UcNl23qhB8A%3Ffeature%3Doembed

.

“This just in.  Everything is fine… the liquidity of the Western banking system has never been stronger”… “Look over there folks, Trump indictment, nothing to see here folks… move along now”…

Mar 16 2023

Swiss Central Bank Steps in to Backstop Credit Suisse Amid Financial Collapse – The Larger Geopolitical Dynamic is Clear


Posted originally on the CTH on March 16, 2023 

Before getting to the details of the Credit Suisse issue, it is worth taking a bigger geopolitical context to the dynamic.  The initial backstop sought by Credit Suisse was from the Saudi National Bank; however, SNB Chairman Ammar Abdul Wahed Al Khudairy refused more lending {LINK}.

This is where we need to keep the BRICS -vs- WEF dynamic in mind and consider that ideologically there is a conflict between the current agenda of the ‘western financial system’ (climate change) and the traditional energy developers.  This conflict has been playing out not only in the energy sector, but also the dynamic of support for Russia (an OPEC+ member) against the western sanction regime.  Ultimately supporting Russia’s battle against NATO encroachments.

Russia, Saudi Arabia and China are geopolitically aligned in interest against the western financial system.  As a consequence, when western banks find themselves in need of capital and cash, there is a layered geopolitical dynamic in the background to Saudi refusal that must be considered.

With multiple western banks now in trouble, Credit Suisse is also exposed, and, like U.S. Treasury/Fed intervention in America, the Swiss central bank has stepped in to backstop the looming collapse.

In the big picture we are seeing the ramifications of the ‘Build Back Better‘ agenda impacting the banking and finance sector which spearheaded it.  I am not seeing this discussed anywhere, as the western governments of the collapsing banks are being forced to intervene.

(Reuters) – Credit Suisse on Thursday said it was taking “decisive action” to strengthen its liquidity by borrowing up to $54 billion from the Swiss central bank after a slump in its shares intensified fears about a broader bank deposit crisis.

The Swiss bank’s problems have shifted the focus for investors and regulators from the United States to Europe, where Credit Suisse led a selloff in bank shares after its largest investor said it could not provide more financial assistance because of regulatory constraints.

Regulators in the private banking hub on Wednesday had sought to ease investor fears around Credit Suisse, which added to broader worries sparked by last week’s collapse of Silicon Valley Bank and Signature Bank, two U.S. mid-size firms.

Asian stocks had extended Wall Street’s tumble on Thursday and investors bought gold, bonds and the dollar, leaving markets on edge ahead of a European Central Bank meeting later in the day. The bank’s announcement in the early European morning helped trim some of those losses though trade was volatile. (read more)

Again, I go back to the geopolitical map.  The yellow nations with sanctions against Russia are also the yellow nations driving the ‘Build Back Better’ climate change energy policy.  The grey nations are not in alignment with either dynamic.  It is not a coincidence the banking issues are all within the yellow nations.

(Via Daily Mail) Wall Street’s main stock indexes opened lower on Wednesday, as turmoil at Credit Suisse renewed fears of a banking crisis and sent shares of major US banks lower.

At the opening bell, the Dow Jones Industrial Average fell 396 points, or 1.23 percent, while the S&P 500 opened 1.09 percent lower and the Nasdaq Composite dropped 1.20 percent.

Shares of First Republic, one of the regional banks swept up in contagion fears after the collapse of Silicon Valley Bank, dropped up to 11 percent after the bank’s bond rating was downgraded to junk status by S&P.

In Europe, shares of Credit Suisse plunged more than 25 percent, hitting a new record low for the second day in a row, after the Swiss bank’s largest investor said it could not provide more financial assistance to the lender.

The Big Four trillion-dollar US banks suffered in early trading after yesterday’s rally. Wells Fargo slid 3.9 percent, Citigroup dropped 4.3 percent, Bank of America was down 2.2 percent and JP Morgan saw a 3.5 percent dip.

After the collapse of SVB Financial and Signature Bank, emergency measures by US authorities had soothed some worries about the health of the other banks, helping regional lenders stage a rebound in Tuesday’s session.

However, regional banks were giving back their gains in early trading Wednesday, with shares of First Republic, PacWest and Western Alliance all down between 2.7 percent and 11 percent.

[…] Driving investor sentiment was turmoil at Credit Suisse, after its biggest shareholder – the Saudi National Bank – said that it would not inject more money into the ailing Swiss bank.

Saudi National Bank chairman Ammar Al Khudairy told Reuters: ‘We cannot [buy more shares] because we would go above 10 percent. It’s a regulatory issue.’

The Saudi bank holds a 9.88 percent stake in Credit Suisse, according to Refinitiv data. (read more)

Yellow Team -vs- Gray Team:  Remember, China just brokered a deal to lessen hostilities between Iran and Saudi Arabia. The fulcrum of that agreement was economics.

Meanwhile in North America, Mexican President Andres Manuel Lopez-Obrador has said he was not willing to join the energy suicide pact pushed by Joe Biden and Justin Trudeau…. A policy break in the trilateral relationship which suddenly, and not coincidentally, aligns with the timing to make Mexico a pariah to the U.S. vis-a-vis a renewed media push on the drug cartel narrative.

BIG PICTURE NOT BEING DISCUSSED – The western politicians followed the climate change instructions of the WEF multinational corporations and banks (Build Back Better) and post-pandemic immediately started reducing energy development.  The central bankers then began raising interest rates to shrink the economies of the same western nations to the scale of the now diminished energy production.

The raising of interest rates is now hitting the national and multinational banks impacted by government policy that was following WEF orders.  Now the western politicians are stepping in with the government controlled central banks to backstop the national banks and multinationals.  Can you see the dynamic?

Team yellow is suffering the consequences of their own ideological policy as enacted.  Team grey is not going to help team yellow get out of a crisis team yellow created, which was intended to hurt team grey.

…. And we continue watching.

Mar 10 2023

The Credit Suisse Latest Scandal


Armstrong Economics Blog/Banking Crisis Re-Posted Mar 10, 2023 by Martin Armstrong

Credit Suisse has gone from one crisis to the next. Last month alone, the bank reported that customers have withdrawn $120 billion. A rogue employee stole the names of people with $50 million or more and probably gave that to tax authorities for a bribe – the second time this has taken place in Switzerland.

The Swiss bank is telling some top clients with $50 million or more in the bank that sensitive personal information including social security identification, employment information, and contact details has been compromised. The leaked information came from a whistle-blower, for money, who shared his findings with the German newspaper Süddeutsche Zeitung, according to a press release. Credit Suisse wrote that a rogue employee has taken individuals’ data, “an individual employee, who has since left the firm and had legitimate access to your personal data at the time for their daily work, inappropriately copied this information without Credit Suisse’s authorization onto their personal device.”

The bank told clients that it would enroll them in an identity theft protection service, Identity Works, but wouldn’t pay for other fees, some as low as $20, associated with protecting their identity as a result of the theft, sources add. While Credit Suisse said clients can file a report with the Federal Trade Commission or a state Attorney General, the bank won’t cover any of those filing costs either.

While the major support lies at the 2.37 followed by extreme long-term support at the 1.60 level, it still appears that we should see a temporary low form here in 2023. We would need to rally and close above the 3.60 level for year-end to imply a 2023 low would hold.