Speaker 1: Live from the Bloomberg Interact Day Brokers Studios. This is
Speaker 1: Bloomberg day Break for Monday, March twentieth. Coming up today,
Speaker 1: UBS takes on Credit Suis buying the troubled bank for
Speaker 1: more than three billion dollars to move up ends the
Speaker 1: bond market, wiping out seventeen billion dollars of the riskiest
Speaker 1: bawns at Credit Suite. Shares of UBS plunge as analysts
Speaker 1: point to potential earnings risk and global banking stocks slump
Speaker 1: in the wake of the deal. A lawyer ally with
Speaker 1: Donald Trump testifies today before New York grand jury plus
Speaker 1: Chinese president. She meets today with the Russia's Vladimir Putin.
Speaker 1: I'm Michael Barr. More ahead, I'm down stash Aaron's boards.
Speaker 1: Another easy win for the Rangers, that Devils won, the
Speaker 1: Nets lost their down to the sweet sixteen of the
Speaker 1: NCBA tournaments. That's all straight Ahead on Bloomberg day Break,
Speaker 1: The business news you need, disturn your day, and just
Speaker 1: one fifteen minute podcast each pointing on Apples, Spotify, the
Speaker 1: Bloomberg Business Appen everywhere you get your podcasts. Good morning,
Speaker 1: I'm Nathan Hager and I'm Kieron Moscow. Here are the
Speaker 1: stories we're following today. We begin with reaction to the
Speaker 1: hastily arranged takeover of Credit Suis. So far, the deal
Speaker 1: is failing to calm fears in the banking industry. Shares
Speaker 1: of Credit Suis right now are down nearly sixty percent,
Speaker 1: while the bank that bought that firm, UBS is lower
Speaker 1: by nine percent. That's after UBS agreed to buy Credit
Speaker 1: Suie for three point two billion dollars. The chairman of UBS,
Speaker 1: Calm Kelleher, is trying to soothe concerns about the government
Speaker 1: broker deal. It's a historic day in Switzerland, then, a
Speaker 1: day frankly we hoped would not come. I would like
Speaker 1: to make it clear that while we could not initiate discussions,
Speaker 1: we believe that this transaction is financially attractive for UBS shareholders,
Speaker 1: protects UBS from additional downside and should support earning his
Speaker 1: growth over time. UBS chairman Calm Kellerher says he will
Speaker 1: shrink the investment bank a Credit Suie, a unit that
Speaker 1: racked up losses in recent years, and Nathan, I mean
Speaker 1: a global team. Coverage of this historic dl we begin
Speaker 1: with the Bloomberg's francy in Lakwise in Switzerland who attended
Speaker 1: the UBS Credit Suite press conference in Berne yesterday. They
Speaker 1: feel the questions for about an hour and a half.
Speaker 1: I think they thought this would last for about forty
Speaker 1: five minutes, and there are so many questions. First of all,
Speaker 1: UBS got this quite on the cheap. I mean, why
Speaker 1: did they get it so cheap? I think it is
Speaker 1: probably one of the first questions when you look at
Speaker 1: the valuation on Friday and also the amount of liquidity
Speaker 1: of guarantees that they had to get from the government.
Speaker 1: Do they know something in Cretty sueee that no one
Speaker 1: else knows. I think this is one of the first
Speaker 1: questions that a lot of people will ask. Certain market
Speaker 1: participants will try and tell did they see a scary
Speaker 1: movie and so wanted to make sure that they were protected.
Speaker 1: Bloomberg's Francy Laquais reporting from Switzerland and we continue our
Speaker 1: team coverage in Zurich now where a long time Credit
Speaker 1: Suice reporter man As Cranny picks up the story. This
Speaker 1: is about liquidity, a lifeline and ensuring the borders of
Speaker 1: Switzerland remain robust of financial borders. This could be the
Speaker 1: steel of the century for UPS. Colin Gallaher and Ralph Hammers. Actually,
Speaker 1: if they slept on it overnight, I thought, wow, your
Speaker 1: credit space was worth eighty billions? Was Franks At one
Speaker 1: juncture they got a three and Bloomberg's menace Cranny reporting
Speaker 1: from Zurich, more team coverage on the way now as
Speaker 1: we assessed the fallout from this deal, Bloomberg Finance reporter
Speaker 1: Marion Helftermeyer says thousands of job cuts are likely on
Speaker 1: the way now. The next step to watch for will
Speaker 1: be just how they actually combine these two banks. There
Speaker 1: will be massive, massive job cuts here because there is
Speaker 1: an incredible amount of overlap between the two banks, both
Speaker 1: in Switzerland and globally, and in particular UBS has said,
Speaker 1: you know, we have our own investment bank, so you know,
Speaker 1: watched out for a massive windown of the Credit swieas
Speaker 1: investment bank and Bloomberg Finance reporter Maryon Halftermeyer reports bondholders
Speaker 1: are also angry about the terms of the takeover. The
Speaker 1: fourth sale means seventeen billion dollars of the risky of
Speaker 1: bonds at Credits Suite are now worthless well Karen. Reaction
Speaker 1: continues to pour into the takeover of THEE hundred sixty
Speaker 1: six year old bank. We got the take from Bloomberg
Speaker 1: opinion calumnist Muhammadhalarrian and Bain Appital CoA chairman Steve Pagliuka.
Speaker 1: This was not the best solution, but it dominated the
Speaker 1: other two, which was either nationalization or trying to wind
Speaker 1: down the bank. But it's full of contradictions. When the
Speaker 1: first crisis happened in two thousand and eight, the whole
Speaker 1: issue was systemic collapse. We don't have a systemic collapse.
Speaker 1: Now we have a crisis of confidence, and that crisis
Speaker 1: of confidence can ratchet into a bad economy. Muhammadal Area
Speaker 1: and Steve Pagliuca made their comments on yesterday special edition
Speaker 1: of Bloomberg Surveillance on Bloomberg Radio and Television. So how
Speaker 1: will this banking turmoil impact rates at this week's FED decision, Nathan,
Speaker 1: While we spoke with former Atlanta Fed President Denis Lockhart.
Speaker 1: At this stage, I am inclined to give a majority
Speaker 1: probability to a twenty five basis point hike, but a
Speaker 1: non trivial probability to a pause. And former Atlanta Fed
Speaker 1: President Denis Lockhart says the Fed's rapid rate increases have
Speaker 1: taken some bank executives by surprise. Now back here in
Speaker 1: the US, Karen banking turmoil is also in focus. Signature
Speaker 1: was a three major banks that collapsed this month, and
Speaker 1: starting this morning, it's forty branches will operate as Flagstar.
Speaker 1: We get more in this live report from Bloomberg's John Tucker.
Speaker 1: Good morning, John, and Nathan. Flagstar Bank of Hicksville, a
Speaker 1: unit of New York Community Bankcorps, agreed to buy thirty
Speaker 1: eight billion dollars of Signature's assets from the FDIC. Well,
Speaker 1: the sale didn't offload all of Signature, it does show
Speaker 1: there are buyers out there for such assets. Regulators hope
Speaker 1: it's a move that could calm some of the turmoil.
Speaker 1: Flagstar also assumed liabilities about thirty six billion dollars. That
Speaker 1: includes thirty four billion dollars in deposits a bunch. Like
Speaker 1: Silicon Valley Bank, Signature had a deposit base that was
Speaker 1: mostly unensured. Live in New York, I'm John Tucker, Bloomberg Daybreak.
Speaker 1: All right, John, thank you. When it comes to Silicon
Speaker 1: Valley Bank, it looks like US regulators are getting closer
Speaker 1: to a breakup plan, and we get the details live
Speaker 1: with the Bloomberg. Steve Rappaport, Steve, good morning, Good morning,
Speaker 1: Karen and Nathan. Sources tell us the plan is to
Speaker 1: sell SVB in two parts. The FDIC set up a
Speaker 1: so called bridge bank to take receivership of the firm's
Speaker 1: assets and liabilities. Bids for that or do Friday. The
Speaker 1: regulator will take bids by Wednesday for SBB Private Bank.
Speaker 1: That's the remnants of Boston Private acquired by the bank
Speaker 1: in twenty twenty one. The FDIC tried to sell both
Speaker 1: parts together over the weekend, but extended the deadline to
Speaker 1: attract more potential buyers. Live in New York. I'm Steve Rappaport,
Speaker 1: Bloomberg Daybreak. Thank you, Steve. And when it comes to
Speaker 1: First Republic Bank, those shares are plunging again this morning.
Speaker 1: There's still no word of a rescue plan there. SMP
Speaker 1: Global has downgraded the bank again. First Republic shares are
Speaker 1: falling nearly twenty percent in early trading. It's thirty two
Speaker 1: degrees in New York. It's going to be sunny and
Speaker 1: mild today, heading the low fifties, and we'll get down
Speaker 1: to the upper thirties tonight under a clear sky. Time
Speaker 1: Now for a look at some of the other stories
Speaker 1: making news in New York and around the world, with
Speaker 1: Bloomberg's Michael Barr a Good Morning, Mike Call, Good Morning Nathan.
Speaker 1: A lawyer allied with Donald Trump, plans to testify before
Speaker 1: New York grand jury today. Robert Costello is expected to
Speaker 1: make the kays the former president should not face criminal
Speaker 1: charges over hush money paid during his twenty sixteen campaign
Speaker 1: to poor and start Stormy Daniels. Costello says he has
Speaker 1: information raising questions about the credibility of a key witness
Speaker 1: in the investigation, former Trump lawyer and fixer, Michael Cohen.
Speaker 1: Democratic Senator Elizabeth Warren that investigation should be allowed to
Speaker 1: go forward appropriately. If it's time to bring indictments, then
Speaker 1: they'll bring indictments. That's how our legal system works. Senator
Speaker 1: Warren spoke on ABC's This Week, which can be heard
Speaker 1: Sundays on Bloomberg. Trump says if he is arrested tomorrow,
Speaker 1: he is calling for protests if it happens. Among his
Speaker 1: supporters outside Merolago yesterday was this woman who traveled from
Speaker 1: New Jersey. It's just about everybody coming out together and
Speaker 1: supporting altogether. It's like one big happy family Manhattan. DA
Speaker 1: Alvin Bragg is not saying whether he'll charge Trump, but
Speaker 1: he emailed his staff over the weekend saying we do
Speaker 1: not tolerate attempts to intimidate all our office. Instigations continue
Speaker 1: after five children from Connecticut, ranging an age from eight
Speaker 1: to seventeen, were killed in a fiery early morning crash
Speaker 1: yesterday on a New York highway in Westchester County. Police
Speaker 1: believe the vehicle was being driven by a sixteen year
Speaker 1: old boy when it veered off the Hutchinson River Parkway
Speaker 1: and Scarsdale, hit a tree and caught fire. The only
Speaker 1: survivor was a nine year old boy. Russian President Vladimir
Speaker 1: Putin hosts Chinese President Chijingping for meetings today in Moscow.
Speaker 1: Fordham University professor Beth Noble says the ongoing conflict with
Speaker 1: Ukraine will be a major focus. The Chinese leader, Shijinping
Speaker 1: is portraying his visit to Russia as a personal mission
Speaker 1: to help bring peace to Ukraine, but he's hardly been
Speaker 1: an honest broker so far. China has proposed a peace
Speaker 1: plan for Ukraine, but it's one that many world leaders
Speaker 1: have said is a non starter since it leans heavily
Speaker 1: towards Russia. Professor Noble as China and Russia is said
Speaker 1: to have a no limits partnership. About twenty five thousand
Speaker 1: runners participated in the New York City half Rathon. Olympian
Speaker 1: Jacob to Plomo from Uganda won the race. Global teams
Speaker 1: twenty four hours a day, powered by more than twenty
Speaker 1: seven hundred journalists and analysts and over one hundred twenty countries.
Speaker 1: Michael Barr and this is Bloomberg. Nathan. All right, Michael,
Speaker 1: thank you time now for the Bloomberg Sports Update, brought
Speaker 1: to you by Trice State. Howdy you got Morney John
Speaker 1: Stash After morning, Nathan, the Nights of Fairlie Nakin. Soon
Speaker 1: they'll be back on campus in Teenac today. They had
Speaker 1: a heck of a weekend at the NCAA Tournament Columbus, Ohio.
Speaker 1: The stunning upset Friday night of top seeded per DWO
Speaker 1: and FTU came out strong second half last night, had
Speaker 1: a five point lead on Florida Atlantic with the Owls,
Speaker 1: who are thirty three and three on the season, came
Speaker 1: back to win seventy eight to seventy When Marquette the
Speaker 1: two seed in the East was upset by Michigan State.
Speaker 1: Had meant that each of the four days of the
Speaker 1: Attorney a one or two seed had lost. Michigan State
Speaker 1: will now play at the Garden Thursday against Kansas State,
Speaker 1: who'll be Kentucky. The other game at MSG will be
Speaker 1: Florida Atlantic again Tennessee. It was hockey at the Yard
Speaker 1: last night, and the Rangers tied a club record with
Speaker 1: a six goal first period. They meet in Nashville seven
Speaker 1: to nothing the night after the Blue Shirts. They had
Speaker 1: beaten Pittsburgh six to nothing. KeAndre Miller last night two
Speaker 1: goals to assist just in the opening period. Devil's Lightning
Speaker 1: met for the third time in the six days. New
Speaker 1: Jersey one at Tampa five two, first career hat trick
Speaker 1: for Yesford Bratt at Barclay's Nets lost to Denver one
Speaker 1: O eight, one h two, thenothers Jamal Murray twenty five
Speaker 1: points in the first quarter. Nick's host Minnesota tonight, a
Speaker 1: US route at the World Baseball Classic semifinals in Miami,
Speaker 1: fourteen to two over Cuba. Pair of home runs for
Speaker 1: Trade Turner Paul goldschmid homer. They both drove in four
Speaker 1: runs championship game tomorrow against either Mexico or Japan. Mets
Speaker 1: lost the Cardinals eight seventy. Yankees lost in the Oils
Speaker 1: five to three. Garrett Cole four scoreless innings, but then
Speaker 1: he gave up four runs in the fifth. Carlos Alcarez
Speaker 1: won the tennis at ending Wells regained the world number
Speaker 1: one night. Johnskashawar Bloomberg Sport live from coast to coast,
Speaker 1: from New York to San Francisco, Boston to Washington, DC,
Speaker 1: nationwide on Sirius, XAMP, the Bloomberg Business app, and Bloomberg
Speaker 1: dot Com. This is Bloomberg Daybreak. Good morning on Nathan Hagar.
Speaker 1: The hastily arranged takeover over the weekend of Credit Suis
Speaker 1: by UBS does not appear to be offering solace to
Speaker 1: investors this morning. Worries continue about even wider fallout from
Speaker 1: a crisis in banking confidence that has now been going
Speaker 1: on for several days. Let's bring in Alison william senior
Speaker 1: analysts for Global investment banks and asset managers at Bloomberg Intelligence,
Speaker 1: as well as Bloomberg's Mannis Cranny, who has covered UBS
Speaker 1: and Credit Suis for years, was in burn Switzerland, for
Speaker 1: the takeover announcement, and Mannis joins me from Switzerland. Now Mannis,
Speaker 1: I'm watching shares of UBS and Credit suis plummet this morning.
Speaker 1: Before we get to the price action, though, let's just
Speaker 1: talk about how historic this is that a bank that
Speaker 1: has more than one hundred sixty year history is now
Speaker 1: being taken over by its rival right across the street.
Speaker 1: Made in a very good days year, Allison, This just
Speaker 1: symbody was never supposed to happen. Ever again post GFC
Speaker 1: taking my own back to Leahman's going under, to Namura
Speaker 1: coming in and scooping up the paths to RBS in
Speaker 1: the UK being nationalized, this was a marriage of very
Speaker 1: unequal partners. This is a very uncomfortable, one could say,
Speaker 1: and many have used the phrase shotgun wedding. The issue
Speaker 1: with that is you never know what your in laws
Speaker 1: are going to be like. In other words, what is
Speaker 1: still remaining inside Credit Suites that UBS has not had
Speaker 1: the chance to do due diligence on the finance minister
Speaker 1: in Burne last night. Frantine was in Burne, I was
Speaker 1: in Zurich. And the phrase that was used, this is
Speaker 1: not a bail ote, this is not a baylight. Well,
Speaker 1: if this is not a baylight, one hundred billion of
Speaker 1: a backstop in liquidity for credits for the new entity
Speaker 1: is there? And a nine billion backstop in terms of
Speaker 1: losses potential losses that the new entity may need to
Speaker 1: take in the event of winding down what are called
Speaker 1: highly liquid or level three instruments inside the credit police vehicles.
Speaker 1: So right now this is a bail in of bombs
Speaker 1: and that's the big spooky issue for markets, credit and
Speaker 1: equity markets today. What kind of unanswered questions, manness, are
Speaker 1: there about Credit suisses books? I mean, we understand that
Speaker 1: they have had a number of scandals over the years,
Speaker 1: a number of crises over the years. Is that part
Speaker 1: of the reason why we're seeing this drop in both
Speaker 1: companies shares this morning, that we don't have a fully
Speaker 1: clear picture of what the books look like at Credit Suez. Look,
Speaker 1: I think that's part of it. But be assured there's
Speaker 1: a liquidity boxtop of one hundred billions so stranks at
Speaker 1: the point one, this was a liquidity issue, not a
Speaker 1: capital issue that drove this shotgun wedding. However, Colin callaher
Speaker 1: the new chairman of the joint entity, and the chairman
Speaker 1: of UBS made it very very clear we're going to
Speaker 1: de risk. We're going to bring that investment bank dying
Speaker 1: to about twenty five percent of the overall size of
Speaker 1: the combined entity. That is going to mean some serious
Speaker 1: addressing of higher risk assets that are inside the investment bank.
Speaker 1: The issue with that, and I take you back to
Speaker 1: twenty twenty fourteen, when you're trying to sell off assets
Speaker 1: that are highly a liquid, difficult to price and nobody
Speaker 1: really wants. That's when the difficulty comes in. And that's
Speaker 1: maybe where the losses are potentially to come. But there
Speaker 1: is a backstop and I will use that word time
Speaker 1: and time again because that is yet to be fully comprehended. Here.
Speaker 1: Want to bring in Alison Williams this discussion and our
Speaker 1: senior analyst for a global investment big asset managers at
Speaker 1: Bloomberg Intelligence. Alison, what are some of the unanswered questions
Speaker 1: for you when it comes to this UBS credit sweet tip? Well,
Speaker 1: I think the biggest the biggest question for UBS shareholders
Speaker 1: is you know the length of time it's going to
Speaker 1: take for this deal to be a creative and in
Speaker 1: some sense they're they're taking on some of the restructuring
Speaker 1: challenges that credit Swos is already facing. They're doing it
Speaker 1: with a stronger balance sheet. Um, so that's helpful. But um,
Speaker 1: you know, the deal I think is a little unnerving
Speaker 1: to markets, just because of the treatment of the at
Speaker 1: ones and also that it's um not requiring approval of
Speaker 1: UBS shareholders. So I think those two things definitely are
Speaker 1: not something that the market likes. The market doesn't like
Speaker 1: when when the rules change like that, I guess if
Speaker 1: you will, but I would say that you know, if
Speaker 1: you if you look at the deal from the long
Speaker 1: term perspective of UBS, Yes, they are going to as
Speaker 1: many said, they want to limit the investive bank. But
Speaker 1: it is important to note that credits we had already
Speaker 1: been doing a lot of work in that direction. So um,
Speaker 1: they're already sort of at that twenty five percent. They've
Speaker 1: been selling off credits, we had been selling off assets
Speaker 1: to Apollo, and they're putting the remainder of those assets
Speaker 1: in the bank. And that does remain a big question.
Speaker 1: And to Manny's point, those assets can be hard to sell,
Speaker 1: and that is why you know they're taking the first
Speaker 1: five billion dollars of loss, and then the government is
Speaker 1: taking the next nine billion, so those those assets are
Speaker 1: where they got the government guarantee. There's also the remaining
Speaker 1: legal risks, and I think that is sort of the
Speaker 1: playbook that a lot of US investors look to when
Speaker 1: we think about deals like bear Stearns and Washington Mutual
Speaker 1: and some of the legal risks behind. But I would
Speaker 1: say that two things. First, this is a very different
Speaker 1: situation than two thousand and eight. It's very different for
Speaker 1: the banking system as a whole. And second, most of
Speaker 1: the legal risks are are identified. There are obviously there's
Speaker 1: always a risk for unknowns, but ubs did take an
Speaker 1: added provision related to those risks. And that gets back
Speaker 1: to a point that Manness made Allison at the very
Speaker 1: beginning of this discussion that something like this wasn't supposed
Speaker 1: to happen after the two thousand and eight crisis. A
Speaker 1: bank that's systemically important, the likes of Credit Suite wasn't
Speaker 1: supposed to fail after this. Well, we have a deal
Speaker 1: like this where ubs is becomes the one systemically important
Speaker 1: bank in Switzerland. What kind of risk does that pose
Speaker 1: for UBS? Well, I think you know, one of the
Speaker 1: key drivers for Credit Suite to want to stabilize the
Speaker 1: situation is just a fact that these two banks do
Speaker 1: have ties to each other, and Credit Swee does have
Speaker 1: ties globally. And even though their capital and liquidity position
Speaker 1: were strong, as we know that liquidity, sometimes the situation
Speaker 1: can change quickly. And I think there's you know, there
Speaker 1: there are big differences between Credit suits and what's happening
Speaker 1: in the US, but the one similarity is just um,
Speaker 1: the sentiment and the confidence and so at Credit Suitee,
Speaker 1: the issue was that, especially with you know, a lot
Speaker 1: of the social media that they saw, it was sort
Speaker 1: of reminiscent to what they had seen in the fourth quarter.
Speaker 1: They saw significant outflows as a result of the sentiment
Speaker 1: sentiment and reports are that they were seeing significant UM
Speaker 1: outflows hopefully I use the word outflows earlier and um,
Speaker 1: but you know, and that was what the Swiss regulator
Speaker 1: pointed to as the reason why they they stepped in
Speaker 1: because they started to see those outflows and they really
Speaker 1: felt that they needed to stem you know, stem that
Speaker 1: and instill confidence. You know. The issue with all of
Speaker 1: these measures is that I think, you know, bank regulators,
Speaker 1: it's tough because they have to walk a fine line.
Speaker 1: They have to do enough to install confidence and not
Speaker 1: do too much that you shake investors confidence for the
Speaker 1: need for them to have to step in man. So
Speaker 1: I want to bring you back into the discussion. The
Speaker 1: Swiss National Bank is bringing in a hundred billion franc
Speaker 1: liquidity guarantee for UBS in this merger. What does that
Speaker 1: potentially mean when it comes to the type of confidence
Speaker 1: that investors can continue to have in this bank. Well,
Speaker 1: I think we've got to disaggregate here between depositors, people
Speaker 1: of Switzerland, people around the world, the rich, ultra rich
Speaker 1: and billionaire community around the world in terms of their
Speaker 1: allocation to credit suits in ubs, they probably have a
Speaker 1: kounds with both. So you have the depositor risk and
Speaker 1: then you have investor. An investor confidence and depositor confidence
Speaker 1: are very similar, but they are slightly different things. The
Speaker 1: issue this morning, I'm just looking at g or Or
Speaker 1: on the stock six hundred on the banks page, Deutsche
Speaker 1: Bank dying five percent, Iron Dine six percent, Bodies down
Speaker 1: five percent. The issue is this what has happened here
Speaker 1: from my very first initial reading, Alison, you can maybe
Speaker 1: help clarify this. Urinanalyst and just a vintage banker broker
Speaker 1: commodity drader, which is there has been an inversion of
Speaker 1: the capital structure. In other words, the at one bonds,
Speaker 1: those additional capital bonds have been subsumed to equity. There's
Speaker 1: a morsel of equity given to the shareholders, the pension fundholders,
Speaker 1: the pension people of Switzerland, your equity. You still get
Speaker 1: a morsel and a potential upside the bond. The eighty
Speaker 1: one bondholders have been wiped out. That's what's dislocated banking
Speaker 1: markets in Europe this morning. The cost of capital for
Speaker 1: everybody has shot higher this morning. That is a material risk.
Speaker 1: You waken up this morning to a higher risk of
Speaker 1: the cost of capital in banking, and that as a
Speaker 1: potential fcom or defcon moment in terms of constricting capital
Speaker 1: to the real economy. That's the chronology of risk as
Speaker 1: I see it from where I'm sitting this morning. Now,
Speaker 1: that is a big part of this story, the fact
Speaker 1: that we have something like seventeen billion dollars of these
Speaker 1: riskiest bonds now being completely written down because of this deal.
Speaker 1: Alison Williams, why do that? Why put the bondholders at
Speaker 1: risk rather than the shareholders, changing the order of who
Speaker 1: gets hit hardest by this. So management made clear that
Speaker 1: this was a government decision, and actually the way that
Speaker 1: it structures the deal, it actually provides some capital protection
Speaker 1: to UBS. But I think that Manny is right that
Speaker 1: I that holders of these securities were surprised in terms
Speaker 1: of the way that the capital structure worked. But there's
Speaker 1: actually a great note out this morning by your own
Speaker 1: Julius who covers these securities, and he does to Manny's point,
Speaker 1: you know, point out that precedent means that these type
Speaker 1: of investors for these securities will demand higher yields, and
Speaker 1: so obviously that puts us some questions about the future
Speaker 1: of securities, and it raises the cost of capital. But
Speaker 1: there is you know, with the securities of both UBS
Speaker 1: and Credit Suites are a little bit unique in terms
Speaker 1: of the permanent write down. It's the exception in Europe.
Speaker 1: And he points to the fact that as these securities
Speaker 1: are issued, the language is likely to be different in
Speaker 1: the future. So that's a little bit of a technical issue,
Speaker 1: but I think that's also an important to note. I
Speaker 1: also want to ask about the future of this bank. Now.
Speaker 1: Before the takeover happened, we know that Credit Suite had
Speaker 1: been in the process of cutting nine thousand jobs. Now,
Speaker 1: we do expect that there are going to be a
Speaker 1: lot of redundancies as this deal continues to play out
Speaker 1: work itself out over the next few months. Allison, where
Speaker 1: do you expect job cuts to come down between Credit
Speaker 1: Suites and ubs? I think you know the cuts are
Speaker 1: going to be broad. If you looked, you know, Credit
Speaker 1: sweets their plan as it was, a lot of it
Speaker 1: involved simplic simplification and eliminating redundancy. I know that there
Speaker 1: will probably be a lot of stories about the investment
Speaker 1: bank UM and certainly there there might be some cuts there.
Speaker 1: But again I would just point to the fact that
Speaker 1: you know, those trading assets have come down a lot,
Speaker 1: and I think you know, the one remaining question is
Speaker 1: really what happens to UM the investment bank just in
Speaker 1: terms of the underwriting and advisory business. This was the
Speaker 1: business UM that that was going to be spun out
Speaker 1: in the Credit Sweets first. Boston Harbout and the UBS
Speaker 1: did point to the fact that they feel that as
Speaker 1: a result of this deal they can and expand their
Speaker 1: global banking and research capabilities, add to some the M
Speaker 1: and A capability. So it does suggest that there is
Speaker 1: a place for some of that talent. Manis Cranny. Obviously
Speaker 1: you've covered both these banks for some time. What are
Speaker 1: you looking for to come next in the fallout from
Speaker 1: this takeover, We've got to hear from tellahr and WELB
Speaker 1: Hammas In terms of strategy, how do you reduce the
Speaker 1: investment bank? Where are the duplications wealth management asset management?
Speaker 1: There is huge crossover in terms of human capital, in
Speaker 1: terms of technology, and in terms of footprint. This is
Speaker 1: going to mean a fundamental reassessment of two of the
Speaker 1: biggest institutions in Switzerland, and that has a human cost
Speaker 1: and indeed an economic cost. I'm going to have to
Speaker 1: buy out of the conversation. Ladies and gentlemen. A busy
Speaker 1: morning forgives me Alison Nathan off to a rooftop near you,
Speaker 1: continuing the conversation on radio and on TV right now.
Speaker 1: All right, I appreciate you coming on with us. Mannis
Speaker 1: thanks for your coverage throughout the weekend. I hope we
Speaker 1: can check in with you in the days to come
Speaker 1: as we continue following this story. But as we conclude
Speaker 1: this conversation with Alison Williams of Bloomberg Intelligence, Obviously we've
Speaker 1: been talking about the the overlap and the potential for
Speaker 1: future job cuts at Credit Suite and UVS. At our
Speaker 1: last twenty seconds here, Allison, what are you looking for
Speaker 1: to come next? I think we do need details on
Speaker 1: the plan. It was clear from it it's clear that
Speaker 1: this was a few day process, and it was clear
Speaker 1: for management that they don't have a lot of the details.
Speaker 1: In terms of some of the numbers that they put
Speaker 1: out there, it seems like they could be conservative, but
Speaker 1: we'll want to know more about exactly where the eight
Speaker 1: billion cuts are coming from. Those cuts are being said
Speaker 1: to execute through twenty twenty seven, so how much and
Speaker 1: how are we going to see some of those reductions.
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