Switzerland’s tab for shoring up its reputation as a financial center could run to 12,500 Swiss francs ($13,500) for every man, woman and child in the country.
To backstop the emergency sale of Credit Suisse Group AG to its Zurich rival UBS Group AG, the Swiss government pledged to make as much as 109 billion francs available — a hefty burden for the country of 8.7 million people.
On top of that, there’s a guarantee from the Swiss National Bank of 100 billion francs that isn’t backed by a government guarantee, according to the deal announced Sunday evening.
The combined sum of 209 billion francs is equivalent to about a quarter of Switzerland’s gross domestic product and exceeds total European defense spending in 2021. The price tag for Switzerland’s largest ever corporate rescue could add up to more than three times the 60 billion-franc bailout of UBS in 2008.
The renewed rescue for well-paid bankers sparked protests. About 200 people gathered outside Credit Suisse’s headquarters in Zurich on Monday, chanting “eat the rich” and throwing eggs at the building at the heart of the city’s financial district.
“We are fed up with the idea that if you are big enough, you get everything,” said Christoph Rechsteiner, a partner at the Zurich-based tax consultancy MME. “The law is changed for you over a weekend.”
Earlier this month, we learned that Perth Mint has some “issues” (source)
The historic Perth Mint is facing a potential $9 billion recall of gold bars after selling diluted or “doped” bullion to China and then covering it up, according to a leaked internal report.
Paraphrasing Warren Buffet, it’s when the tide goes out that you see who’s been swimming naked…
Earlier still, it was reported that a Chinese jewelry allegedly deposited fake gold bars to secure loans from Chinese banks (source)
One of China’s largest gold jewellery manufacturers, Wuhan-based and NASDAQ-listed Kingold Jewelry, is being accused of depositing fake gold bars as collateral to obtain loans from 14 Chinese financial institutions.
The 83 tonnes of gold were purportedly valued at 20.6 billion yuan (A$4.2 billion) but many of them have turned out to be gilded copper, according to reports from Beijing.
Thanks for the amazing Perth Mint story. Truly penny-wise, pound-foolish.
From the article:
The mint began doping its gold as a cost-saving measure in 2018, expecting to save up to $620,000 a year — a tiny fraction of its annual sales.
At today’s gold prices, buying back that amount of bullion would cost $8.7 billion. This would then need to be transported back to Perth and recast before it could be sold again.
Financing a recall of this scale would also be difficult for the mint and would likely require support from WA taxpayers.
PS: And, no, I didn’t read the article before I imputed CCP influence on this “transaction”. It just makes sense that the CCP would want to discredit western gold what with BRICS and the emerging bromance between Putin and Xi Jinping. The Maoists have the west’s number and have had it for almost a century. Why do you think the “libertarians” went hard over in favor of open borders against the will of more than a supermajority of the US citizens ever since 1960, thereby nuking the West as well as the only remotely reasonable candidate for President, Ron Paul (getting Ron Paul to declare, during a critical presidential campaign debate, a border wall to be the equivalent of The Berlin Wall)? The Maoists were ROFLMA when Ron Paul did that. The West dropped like a ripe Mellon into the CCP’s hands.
Reason Magazine is and has always been an organ cultivated by the CCP.
Here is a one hour interview with Balaji Srinivasan in which he explains his analysis of the unfolding banking crisis, the reasons he expects a flight to Bitcoin, the factors he sees contributing to a near-term breakout hyperinflation in the dollar, and the significance of the Federal Reserve’s roll-out of its FedNow (“trust us—it’s not a central bank digital currency”) system in the May to July 2023 period.
Balaji took a big credibility hit for me with his apocalyptic predictions regarding $1M/BTC. I get that he’s a strong believer as the universal cure for (almost) everything, however that prediction sounded too close to a good old “pump and dump” move.
Deutsche Bank five year credit default swaps are climbing to the sky.
Deutsche Bank announced today (2023-03-24) that it was redeeming (calling) one of its tier 2 bonds, paying off bond holders at face value. However, Deutsche Bank’s AT1 bonds (the same type on which Credit Suisse totally defaulted, wiping out bondbag-holders) are cratering, with yields topping 16%, should you want to pick some up.
Deutsche Bank’s stock got a bounce in late trading after reassuring comments from regulators and politicians, but still doesn’t look great on the chart.
Meanwhile in the U.S., Treasury Secretary Janet Yellen has called an emergency “financial stability meeting”, closed to the public, with the heads of all of the assorted financial regulatory bodies,
The Federal Deposit Insurance Corporation (FDIC) entered into a purchase and assumption agreement for all deposits and loans of Silicon Valley Bridge Bank, National Association, by First–Citizens Bank & Trust Company, Raleigh, North Carolina.
The 17 former branches of Silicon Valley Bridge Bank, National Association, will open as First–Citizens Bank & Trust Company on Monday, March 27, 2023. Customers of Silicon Valley Bridge Bank, National Association, should continue to use their current branch until they receive notice from First–Citizens Bank & Trust Company that systems conversions have been completed to allow full–service banking at all of its other branch locations.
Depositors of Silicon Valley Bridge Bank, National Association, will automatically become depositors of First–Citizens Bank & Trust Company. All deposits assumed by First–Citizens Bank & Trust Company will continue to be insured by the FDIC up to the insurance limit.
⋮
The FDIC and First–Citizens Bank & Trust Company entered into a loss–share transaction on the commercial loans it purchased of the former Silicon Valley Bridge Bank, National Association. The FDIC as receiver and First–Citizens Bank & Trust Company will share in the losses and potential recoveries on the loans covered by the loss–share agreement. The loss–share transaction is projected to maximize recoveries on the assets by keeping them in the private sector. The transaction is also expected to minimize disruptions for loan customers. In addition, First–Citizens Bank & Trust Company will assume all loan–related Qualified Financial Contracts.
The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) to be approximately $20 billion. The exact cost will be determined when the FDIC terminates the receivership.
As of 2022-12-31, the FDIC’s Deposit Insurance Fund balance stood at US$ 128.2 billion. Thus, this single bank failure consumed 15.6% of the fund insuring all banks in the U.S.
Here’s another of those “year of the jackpot” graphs, this time data series H8B3094NSMA from the Federal Reserve, “Borrowings, Small Domestically Chartered Commercial Banks”. I have shown data starting at 2000-01-01.
The most recent data were reported on 2023-03-15. It’ll be interesting to see what the next update looks like.
Overall, the increase in borrowings between March 8 and March 15 is closer to ~$500B - see Table 5 on the page above.
Data include the following types of institutions in the fifty states and the District of Columbia: domestically chartered commercial banks; U.S. branches and agencies of foreign banks; and Edge Act and agreement corporations. The latter two categories together are referred to on this release as “foreign-related institutions.” Data exclude International Banking Facilities. Weekly levels are Wednesday values; monthly levels are pro rata averages of Wednesday values. The data for domestically chartered commercial banks and U.S. branches and agencies of foreign banks are estimated by benchmarking weekly data provided by a sample of banks to quarter-end reports of condition (Call Reports). Large domestically chartered commercial banks are defined as the top 25 domestically chartered commercial banks, ranked by domestic assets as of the previous commercial bank Call Report to which the H.8 release data have been benchmarked. Small domestically chartered commercial banks are defined as all domestically chartered commercial banks not included in the top 25. The data for large and small domestically chartered banks are adjusted to remove the estimated effects of mergers and panel shifts between these two bank groups. (See www.federalreserve.gov/releases/h8/about.htm for more information on how these data were constructed.)
Josiah Charles Stamp, 1st Baron Stamp, Bt, GCB, GBE, FBA, (June 21, 1880-April 16, 1941) was a British civil servant, industrialist, economist, statistician and banker. He was the first director of the Bank of England and chairman of the London Midland and Scottish Railway. Here’s a quote from him:
“Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.”
