Comments (161)

  • Associate 3 in IB - Cov
1mo

UK financial system almost collapsed this week and had to be bailed out urgently.  

1mo
Non-target degen, what's your opinion? Comment below:

That was mostly due to the disturbance of the ALM equilibrium on the balance sheet's of many institutions that are highly exposed to interest-rate risk, and who have a lot of ALM to do (pension funds, etc). So it can be argued that it was systemic . The issue with CS relates only to CS. of course if it does go under, which is very possible, the whole system will be at risk, thus seeing a transition from idiosyncratic to full on systemic risk, but fundamentally, the issues that they're facing are due to their own missteps rather than some systemic issue imo.

ps: this is just an opinion, and far from being fact

1mo
Dr. Rahma Dikhinmahas, what's your opinion? Comment below:

That is an interesting discussion.  Agree with the Twittwr comment (Wolf of 54th St or something) who said you shouldn't expect the same risk level this time around.  The tools used in 2008 were considered extreme at the time, which is why they weren't always used (i.e. save Bear but not Lehman, do QE but only after debating it forever, etc). 

Central banks and legislatures much more ready to act these days.  It's bad for the long term because it lulls big business and especially banks into irresponsible decisions.  But it does reduce the risk of a default in the near term.

Could be as simple as Fed slowing rate hikes.  Of course now it may look like they're doing it in response to these kinds of concerns, so they may put ego/signaling first and keep hiking to show they mean business.  

  • VP in PE - LBOs
1mo

credit suisse

Definitely not the kind of stuff that the CEO of a bank with strong liquidity would say.

Very strong Lehman early September '08 vibe.

Markets are also sensing that something is wrong with CS: share price down 56% YTD, CDS surging to '08 credit crunch level, multiple credit rating downgrades this year, senior executives recently leaving (McCarthy, Welter), etc.

If I were at CS right now, I would be looking for a way out ASAP before things get very ugly.

  • Analyst 3+ in IB - Cov
1mo

I'm at CS.  I'm working on a fairly large megadeal and everything went radio silent mid week through this weekend with my MDs (we have some senior bank people on this deal).  Very weird with how much work we had going on and future deadlines.

Seems like leadership is busy with something else.

Might be a coincidence, but definitely feels odd.

  • Associate 1 in IB - Cov
1mo
[Comment removed by mod team]
  • VP in PE - LBOs
1mo

October 3 Updates

Markets recently closed in Europe.

CS 5Y CDS now at 335 bps and CS 1Y CDS exploded today:

cds 5y

cds 1y

Shitibank says CS is not Lehman though:

citi

1mo
Bordan_Jelfort, what's your opinion? Comment below:

Bro is pumping out analyses and addl. analyses for a rando on WSO.  Gotta love the community  

"Work until your bank account looks like a phone number"
1mo
TopBucketBateman, what's your opinion? Comment below:

Brother, I think the amount of capital they'd need to raise is obscene. They can't lever higher at these rates. They'd need a fat pipe from a large asset manager.

  • Associate 1 in IB - Cov
1mo

With where their CDS is trading right now I think it would be tough to say the least. 

  • Analyst 1 in IB-M&A
1mo

What led to this?  Just the BOE move?  I was just scrolling through Twitter a few days ago and it mostly about UK drama and all of a sudden it's on CS.

  • Associate 3 in IB-M&A
1mo

CS has been in the dumpster for at least the last year.. huge leadership changes, multiple strategic reviews, key dealmakers moving elsewhere, and stock down massively. Strategic review due out the end of this month too. In short, not one specific trigger but a slow avalanche of problems.

Think the story only got "dire" over the weekend because the CEO make some comments that were taken a bit out of context and became a Twitter meme. IMO pretty unlikely CS actually goes down - probably will be some rescue financing or large restructuring.

1mo
oil-king, what's your opinion? Comment below:

Almost signed an offer with CS in August. Gut told me not to after the significant layoffs and inability to pay bonuses in cash. I'm at a MM, but definitely a happy camper.

1mo
commodawg, what's your opinion? Comment below:

Parroting Wharton Professor Jeremy Siegel's take. Siegel thinks inflation has already peaked based on leading indicators, what these indicators are I'm not entirely sure. Even if inflation peaked, going from over 9% down to 8% is hardly a victory. Most talking heads calling for the fed to stop the rate hikes have a lot to gain (Elon, Kathy Wood).

  • Associate 1 in IB - DCM
1mo

I would speculate what's going on is a major sale of one of their business (ie an outright sale of its IB practice).

They are not in a good spot but seems like it's more of a failing company than a total collapse like Lehman. Divestitures seem like a logical next step.

  • Associate 1 in IB - Cov
1mo

The advisory business won't be an attractive asset given the fact that a lot of their advisory work is with sponsors and if they are, I guess simply put, not able to lend to them (understand it's more complex), then why would they get the same mandates? Jefferies will just take more of the deals they would bake off for. 

  • Summer Associate in PE - Other
1mo

Probably the best source for news on Suisse banks is the news portal insideparadeplatz.ch. In German but you might use google translate or so. The author is always very sarcastic but has deep ties into the Swiss banking scene. His articles are expressing deep concern and he also assumes the Swiss government would bail out CS.

  • Analyst 2 in PE - Other
1mo

If you're a junior at CS, look to lateral asap. Tbh I'd even trade down for a strong MM gig. Family friend is a VP there and expects huge cuts to the US IB practice … 30%+

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  • Associate 1 in IB - Cov
1mo

Not sure why this is getting downvoted…This person is giving a practical outlook. I know none of the college juniors here would ever dare to work at a MM bank but you need to consider general outlook of the bank you want to work for, that goes for any corporation. 

  • Associate 1 in IB - Cov
1mo

there are no credible financial reporters.

oh, you are waiting for someone like Andrew "I have a man crush on Jamie Dimon" Sorkin to opine?  

Most of those guys are corrupted and won't report real negative news lest they lose their contacts.

  • Associate 2 in S&T - FI
1mo

Seems like it's just one guy that tweeted out some bogus rumor that didn't even name CS specifically. 

  • Associate 1 in IB - Cov
1mo

theres an emergency fed meeting monday

vatican has moved all their swiss banks funds to vatican controlled banks by sept 30th

more rumors a CS rx starts Monday

40% of the russell2000 companies are unprofitable

money velocity is at an alltime low

  • Analyst 3+ in IB - Cov
1mo

Per financial times today 

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https://www.ft.com/content/6104a699-fa7f-4a81-9c35-a9a2f8ff92d2

"Credit Suisse team leaders are said to have been working the phones all weekend to reassure customers, counterparties and investors on capital and liquidity, as well as to reiterate that restructuring plans are on course."

Sounds like Dick Fulds final moments 

  • Associate 1 in IB - Cov
1mo

Can't divulge too much on this but heard there are some funds that CS is dodging speaking with a bit. Unless those calls happened this weekend, I have a friend at a notable credit fund who said CS is trying to leave them in the dark. 

1mo
horn95, what's your opinion? Comment below:

A lot of this looks more like people wanting to believe they're in the Big Short and can sense the coming earthquake instead of any reasonable logic. If you're at CS you should definitely be more worried about them exiting your business or MD's leaving than a bail-out due to collapse.   

1mo
JulianRobertson, what's your opinion? Comment below:
horn95

A lot of this looks more like people wanting to believe they're in the Big Short and can sense the coming earthquake instead of any reasonable logic. If you're at CS you should definitely be more worried about them exiting your business or MD's leaving than a bail-out due to collapse.   

My thoughts exactly. Everyone likes a good drama storm but to be honest I think the big risk right now if I had to pick a bank that could be in trouble, I'd say DB or Commerzbank if they have exposure to Uniper or others affected by skyrocketing energy prices in Europe. CS is going to have a government backstop from Switzerland. Whether or not that's a good thing or ethical thing is another debate entirely, but it's going to happen.

1mo
MidMarketMcLovin, what's your opinion? Comment below:

My knowledge of CDS is limited so can someone educate on why a 250bps pricing level is noteworthy other than it being a sudden rise and close to GFC levels? If there was a genuine concern of default would it not be shooting far beyond this level? As a tweet notes in the FT article linked above, CS CDS is at same level as General Motors and c.100-150bps over its peers?

1mo
alpgh367, what's your opinion? Comment below:

Bloomberg article said current CS CDS spreads are nowhere near distressed levels. Take that as you will.

1mo
Opportunisticfinance, what's your opinion? Comment below:

100%. Let's put this into context: 250bps CDS spread means I pay $1 and if CS goes under in the next year, the insurance pays out $40. 40:1 odds doesn't spell lehman moment to me. For gods sake, the guy who started this rumor on twitter is a local news reporter in Australia lmfao

1mo
Akephalos, what's your opinion? Comment below:

From my limited understanding: CDS trade above stress levels of GFC and markets give them a decent % chance of a default within the next 5y.

The letter of the CEO to calm the shit down, was called as lousy at best and market participants are not happy at all.

The low share price makes it harder to raise capital, which they might need (various scandals prior to the situation, it's ugly). So if people loose trust into them, their assets are most likely getting downgraded /re valued, which makes it harder to cover for potential credit risks and this is then reflected in the CDS as well.

  • Analyst 3+ in IB - Cov
1mo

Deep down we all wants investment banks to fail because we all hate banking 

  • VP in IB - Cov
1mo

Senior Credit Suisse executives spent the weekend reassuring large clients, counterparties and investors about the Swiss bank's liquidity and capital position in response to concerns raised about its financial strength.

Executives hit the phones after spreads on the bank's credit default swaps, which offer protection against a company defaulting, rose sharply on Friday, indicating investor worries over the bank's financial health.

  • Analyst 2 in IB - Cov
1mo

To all incoming CS analysts.

Stop panicking. Just wait and see what happens. Even if you lose your job, you'll get a great life lesson. Your ex-CEO lost his job only a week after his chairman and board publically announced they were supporting him. Is he devastated? Maybe. But he's still surviving!

Never trust what senior management says. In fact, interpret it entirely the opposite way.

  • Associate 2 in IB - Cov
1mo

Gorman might want the wealth management / PB piece, especially at a heavy discount. Probably won't take their IB piece (much more cost-effective for a bank like MS to just poach their best ppl with huge sign-ons which are unlikely to be too high these days given the market). If you were a bank like Capital One or Truist without a well established non-MM ib franchise it might make sense to buy the CS IB franchise wholesale. But for an MS / GS / JPM, the CS IB franchise is value dilutive.

  • Analyst 3+ in IB - Gen
1mo

If they do this, wouldn't it make more sense to go ahead with a full sale of the IB platform incl. EMEA and Asia? Maybe retaining DACH activities to support their Swiss client base.

The issue is that buyer universe would be quite limited I guess. I'm not a bank expert but I suspect you'd need a Western bank with broad shoulders but sub-scale global IB operations. Maybe someone like BNPP, SocGen or UniCredit in Europe / RBC or TD in North America. And I can't even fathom what a nightmare the integration would be

  • Associate 3 in IB - Cov
1mo

Easy to see the eye catching statement that the spread matches that during the financial crisis, but 250bps is hardly at a level of high risk of default though. Leh at 750 area leading up to '09...now that's distress. 

Chances are things will probably continue to worsen but we have some time before anyone needs to panic.  

  • Intern in IB - Gen
1mo

https://www.cnbc.com/2022/10/03/credit-suisse-seeking-to-assure-investors-amid-financial-concerns-ft.html

"Credit Suisse has also been in talks with investors to raise capital with various scenarios in mind, Reuters said, citing people familiar with the matter as saying it includes a chance that the bank may largely exit the U.S. market."

This is what I guessed. Either they sell the US practice in a spinoff or just completely shut it down. 

  • Analyst 1 in IB - Cov
1mo

Those were MDs that left months back and just wrapped up their garden leave

  • Analyst 2 in IA
1mo

2nd year MBA (disregard my WSO title, not updated) who interned at CS last summer. For what it's worth, we just got a notification from university career services about CS's upcoming info sessions and coffee chats, i.e. they're still hiring. Take that for what it's worth.

I'm not quite panicking, yet, but safe to say I'm monitoring this situation closely.

  • Associate 1 in IB - Cov
1mo

Hiring a couple of summer associates doesn't really mean much…not sure that would calm investors. 

  • Summer Associate in IB-M&A
1mo

what else do you think they would have done lol? Stop campus recruiting altogether and freak out everybody in the firm? They have no choice but to carry on as if everything's okay

  • Intern in IB - Gen
1mo

Maybe if they expect a Swiss government bailout, which could send CS shares up. Kodak went up like 10x after getting government funding for making a vaccine, and it was a failing company.

1mo
Frybird101, what's your opinion? Comment below:

I've been thinking about LEAPs. Need to do more research but assuming they somewhat fix the IB group, and the other parts of the biz do just OK, the stock should pop up once bankruptcy/solvency/other concerns dissipate.

LEAPs would keep exposure low while keeping the upside high.

  • Analyst 1 in IB - Cov
1mo

CNBC just said there's a 95% chance of force merger or bailout in the next 1-2 months but it's not a Lehman moment

1mo
Mighty Burrito, what's your opinion? Comment below:

People want it to be like last time. The cold reality is there were only 13 recessions last century and 3 so far this one. That's not a lot of data points to base a "science" off of. Each situation is unique. This isn't Volcker rates or even close. We had 20%+ unemployment and people kept paying their bills. They just overshot a bit, but it is way better than the alternative. Additionally, it turns out Xi seems to be a bit of an idiot and it takes time to unwind trade dependency with said idiot. Or China can go back to what got them here: more openness and free markets, not Mao 2.0. Same with Pootin. He's like 5'4" and wears lifts.

  • Associate 3 in IB - Restr
1mo

Thanks for the history lesson. Please go back to WFH, we'll take it from here.

1mo
anonmonkey69, what's your opinion? Comment below:
[Comment removed by mod team]
  • Intern in IB - Gen
1mo

The comment got deleted. It was in Econ lab - we're doing a group project about inflation, rates, and the general market going to shit and she just brought it up.

"By the way, did you see what happened to Credit Suisse?!" and then the hell began. She rambled for like 15 minutes citing that they had layoffs and other very generic shit. I asked her: "What do you think about CS' CDS?" She replies "What does CDS mean?"

Eye-roll

  • VP in IB-M&A
1mo

Currently at CS. Whether our bank goes under or gets acquired, once announced we'll soon see massive layoffs across all levels. Trying to lateral as a VP is just a nightmare. Almost no spots across the street at the moment. Gotta buckle up......

  • Intern in IB - Gen
1mo

What are your thoughts on people who are saying everything's fine? 

Controversial
  • Analyst 1 in IB - Cov
1mo

At CS rn in a top group. Just FYI all this stuff is wildly overblown. Most likely nothing will happen to the advisory business. Take a deep breath and get off Twitter.

  • Associate 1 in IB - Cov
1mo

saying you are at a top group at CS is like saying you are the best crewmember on the titanic

  • Intern in IB - Gen
1mo

For what it's worth, spoke to 2 people in coverage groups and they said MDs / clients aren't worried and they're still winning mandates. They only see layoffs in Trading, ECM/DCM and LevFin + 10% layoff like GS which shouldn't affect incoming or first years

1mo
high hopes, what's your opinion? Comment below:

For what it's worth, spoke to 2 people in coverage groups and they said MDs / clients aren't worried and they're still winning mandates. They only see layoffs in Trading, ECM/DCM and LevFin + 10% layoff like GS which shouldn't affect incoming or first years

Those same 2 people are actively spamming their resume everywhere and dreaming of being employed by KeyBanc in Cleveland instead of laid off in NYC finding a lateral spot

  • Analyst 3+ in IB - Cov
1mo

Delusional.  CS has said on record they are considering a divestment of the US advisory business, perhaps as early as this month.

Ask someone older what happens when another bank buys a a divested advisory business (it's not pretty for the target employees).

1mo
high hopes, what's your opinion? Comment below:
Ion26

Who would be a advising CS on asset sales and restructuring?

probably an investment bank with a FIG group. not 100% sure though - might need a new thread for that topic

  • Analyst 2 in IB - Gen
1mo

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  • Intern in ER
1mo

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  • Intern in IB - Gen
1mo

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1mo
CreditAnalyst85, what's your opinion? Comment below:

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  • Associate 2 in IB - Restr
1mo

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1mo
umonkeyhorse, what's your opinion? Comment below:

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1mo
PaleNimbusWhite, what's your opinion? Comment below:

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