Meltdown Update
Carnage continues to spread throughout the financial world.
Credit Suisse was six times the size of Silicon Valley. It’s done.
First Republic got $30 billion, but that’s not enough.
Credit Suisse
Last week, I mentioned that Credit Suisse was under attack.
That may have seemed out of place, considering I was talking about How To Control All US Banks.
I mentioned it, because of its size and worldwide implications.
When Silicon Valley Bank collapsed, it had $209 billion in assets.
Credit Suisse tapped out with $1.4 TRILLION in assets.
UBS just bought Credit Suisse for $3.25 billion.
$16 billion of Credit Suisse bonds are being written down to zero.
Shareholders get one share of UBS stock for every 22.48 shares of Credit Suisse stock they owned.
UBS also gets 100 billion-franc liquidity assistance from the Swiss National Bank.
The Swiss government is granting a 9 billion-franc guarantee for potential losses.
First Republic Bank
MAR 16 – CNBC reported that a group of eleven financial institutions have combined to deposit $30 billion into First Republic as a sign of support.
See deposit details here.
MAR 20 – The Epoch Times reports that Standard & Poor’s wasn’t adequately impressed. $30 billion may not be enough. S&P Global Ratings stated that the package relieved short-term liquidity pressures. But long term, there are more serious problems ahead. FRC tanked 47% today, hitting a new low. The stock is now down 87%, just this month.
Word is, Jamie Dimon, CEO of JPMorgan Chase, has started new talks, trying to arrange another round of financial assistance.
Recruiter’s View
This is going to get worse.
Moody’s warned, recently, that it could downgrade Zions, Western Alliance, Comerica, UMB Financial and Intrust Financial.
Other models indicate that 186 banks have profiles similar to the failed Silicon Valley Bank.
That makes any one of them vulnerable to collapse if fearful depositors suddenly pull out, all at once.
Meanwhile, the Fed is preparing another rate hike.
And Big Tech is laying off workers by the thousands.
(Except for Apple, by the way. Apple hasn’t laid off anyone.)
-TD