At the time of writing, the deal appears to have been well received in Asian markets, but ... and 1907

 This week’s desperation move to engineer the acquisition of Credit Suisse Group AG by UBS Group AG (itself formed by the mega-merger of Union Bank of Switzerland and Swiss Bank Corp. 25 years ago) leaves the nation with just one universal bank. 

At the time of writing, the deal appears to have been well received in Asian markets, but there is no guarantee that this will continue.

The price per share marked a 99% decline from Credit Suisse’s peak in 2007. Shareholders don’t get to vote on this.

Holders of “Additional-Tier 1 (AT-1)” bonds have been wiped out. 

Unfortunately, there is now quite a range of examples of big banks that needed help.

Bigger banks tend to have greater pricing power and can reduce their costs as a proportion of the total. They also tend to create really serious problems for everyone when something goes wrong.

Probably the greatest argument ever made against worrying about “moral hazard”was made by the CNBC commentator Jim Cramer during the summer of 2007, when he argued that the Federal Reserve of the day “knew nothing” and complained that then-Chair Ben Bernanke was thinking like an academic: “He has no idea how bad it is out there!” 

In the Panic of 1907, a run on several large Wall Street institutions threatened all-out collapse. 

John Authers Bloomberg  20 mars 2023 kl. 06:46 CET  

Sommaren 1991 hälsade jag på min gamle gode vän Sven Rydenfelt. Vi talade om fastighetskrisen som då startat på allvar, och den tanklösa överbelåningen.

Ja, det är ju märkligt att människor inte tänker på vad som hände 1907, sa Rydenfelt

Nils-Eric Sandberg, DN 1996-10-18

Throwing a lifeline to the financial system in times of crisis can have unintended consequences. 

Jason Zweig WSJ 17 March 2023


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