Is anyone concerned about Credit Suisse, following on from the US banks failing?

[isthisallnormal]

Apologies if there is a thread already but can't see any.

What do people think of this? How will this affect ordinary people and high street banks and economies?

I'm watching with interest.

whatever happens the burden will be on the taxpayers

@bibbybox which taxpayers? As in, which country? In the US at least, there’s procedures to stop the taxpayer paying in the first instance, isn’t there?

Not sure but I'm watching closely as have a family member that has works there for many years. This feels so similar to 2008.

I'm keeping an eye on it too. Worrying.

Credit Suisse appeals to Swiss central bank for show of support enterprise-sharing.ft.com/redeem/9552a590-bde4-467c-af18-344563e009f3

According to the FT it would most likely be from the Swiss National Bank and Government.

@ChannelyourinnerElsa depends on which companies & countries are impacted by the fallout. I just read that the US gov stepped in to help the SV bank & the commentator was saying it was unnecessary to protect everyone above the protection threasholds.

tai haven't explained that very well, it was an article in the FT

thanks all, was wondering how people were feeling

What happened as SCV isn't a contagion. The bank decided to buy long duration treasuries in a 0% short term interest environment so that it could lure depositors in with 1.8% interest when every other bank was offering 0.

When the fed raised rates, SCV bank was sitting on an unsustainable bond portfolio (bond prices are inversely related to interest rates). They had to sell their bonds at a huge loss. Then the tried to do a capital raise to cover by selling stock which spooked everyone and triggered a bank run.

If your bank isn't doing criminally negligent stupidity like buying long duration bonds out of proportion with any semblance of sane risk management, you'll be fine.

No idea why I keep typing SCV Bank, when I mean to type SVB.....the rest stands.

I heard on the news this morning that US banks have insurance and this covers the losses of invested money in theSVB or any other bank that goes under.

Not sure if the UKarm was separate or if it had a run on it as well. If it had I’m surprised HSBC stepped in so fast.

I think SVB UK was separate, yes.

yes it was. The article was making the point that the US gov were too quick to "jump in & try & protect everyone".

also CS has been struggling for a few yrs.

Yes, I am worried about it because we don’t know which other banks are over exposed to Credit Suisse. Post 2008, no bank is meant to be overexposed to one counterparty but who knows.
As the Swiss economy relies so heavily on its reputation as a safe financial centre with a highly safe currency I reckon they will need to bail out although the large shareholders are mostly foreign (eg Qatari etc). The Swiss central bank needs to assess risk of reputations loss plus counterparty risk to its own smaller players (Switzerland is a conservative country so maybe the latter is largely fine.

On the plus side for the normal consumer this hopefully means no further interest rate rises in the US, hopefully weaker dollar and cheaper energy again…

I work in banking and worked in RBS when the crash happened in 2008, feels a bit like the same looming.Started off with rumbles around the worlds bank then the UK . I hope I am wrong that the banks do not have the same freedom to take risky choices.

Uk and EU banks do have really good liquidity and capital requirements which are designed to prevent them over exposing themselves in this.way. Larger banks are also ring fenced to separate the retail from the investment side. The banks are regularly subject to stress testing by the bank of England.

Plus retail deposits are covered by the FSCS up to 85k per customer per institution with banks required to be able to provide the customer files to te regulator within 24 hours.in the event of a.bank failure so that the FSCS can return funds to customers straight away.

These have all been put in by the regulators since the 2008 crash and in order to strengthen the banking sector, protect customers and ensure that investment bank failure would not take down the retail side.

Ps where strengthened UK and EU regulations have been kept in place US regulators have rolled back some of the tighter rules in recent years.

Thanks. I thought that although they had stepped in, it was using the funds that banks have to pay into for these purposes? An insurance fund of a kind; not tax payer money?

thanks @maddening i find that comforting. This is a really educational thread :)

it looks the SNB have said they will step in to protect CS.

@ChannelyourinnerElsa well the US gov guaranteed all deposits & "but the Federal Reserve created a facility to enable banks to borrow without penalty against government bonds at par value, rather than market value." So whilst in theory no tax payer money has been used yet "any losses by the Federal Deposit Insurance Corporation will be recovered from the wider banking system".

And in the UK we are looking at loosening regulation which is crazy.

I'm worried got my dad. He worked for them for 25 years and has a pension with them. My mum only has a state pension as they couldn't afford to pay for her work place pension years ago. They have a 100k mortgage still. I hope whatever happens his pension will be protected

Yes I'm concerned. I also read the ft article. All bank shares dropped yesterday. Might just be private banks that are over exposed but who knows.

i'm concerned about my s&s ISAs tbh