1
00:00:00,120 --> 00:00:03,640
Speaker 1: All right, thanks very much, Brian. Let's talk about Credit Suite.

2
00:00:03,800 --> 00:00:06,720
Speaker 1: We did have shares turning briefly positive in a wild

3
00:00:06,840 --> 00:00:08,680
Speaker 1: day of trading that did see them drop as much

4
00:00:08,680 --> 00:00:11,200
Speaker 1: as twelve percent at one point, and this comes after

5
00:00:11,280 --> 00:00:15,760
Speaker 1: several analysts published notes bolstering quitted sweezes arguments that the

6
00:00:15,800 --> 00:00:18,759
Speaker 1: firm does have ample capital and liquidity to weather the

7
00:00:18,760 --> 00:00:21,960
Speaker 1: current uncertainty and market volatility. So for more on all

8
00:00:22,000 --> 00:00:25,680
Speaker 1: of this, let's get to Alison Williams, Bloomberg Intelligence Senior

9
00:00:25,720 --> 00:00:31,440
Speaker 1: and analyst of Global Investment Banks. Allison, we have heard

10
00:00:31,680 --> 00:00:34,760
Speaker 1: from CEO or Kerner. Credit Suite has been trying to

11
00:00:34,920 --> 00:00:38,400
Speaker 1: calm staff, acknowledging that the firm is at a critical moment, though,

12
00:00:38,760 --> 00:00:41,600
Speaker 1: which did cause a little bit of uneased describe for

13
00:00:41,640 --> 00:00:46,600
Speaker 1: its just how critical this moment is. So the key

14
00:00:46,640 --> 00:00:48,879
Speaker 1: issue for Credit Suite is that it needs to come

15
00:00:48,920 --> 00:00:53,160
Speaker 1: out with a new strategy to address um some structural

16
00:00:53,200 --> 00:00:56,800
Speaker 1: profitability challenges. But I think a lot of the market

17
00:00:56,840 --> 00:01:01,640
Speaker 1: action in the stock is really to sort of the

18
00:01:01,680 --> 00:01:05,560
Speaker 1: tough market environment that we have, so um, we know

19
00:01:05,720 --> 00:01:09,440
Speaker 1: something is coming. One of the options might be to

20
00:01:09,520 --> 00:01:12,880
Speaker 1: raise capital, and so obviously it's it's tough for a

21
00:01:12,920 --> 00:01:18,480
Speaker 1: stock to study when there could be potential delustion coming.

22
00:01:19,319 --> 00:01:23,320
Speaker 1: The other part of the equation is UH action in

23
00:01:23,360 --> 00:01:28,199
Speaker 1: the CDs for the bank. UM. There were a lot

24
00:01:28,240 --> 00:01:31,319
Speaker 1: of there was a lot of attention paid to this

25
00:01:31,400 --> 00:01:36,800
Speaker 1: by by the media social media. UM parallels by some

26
00:01:37,440 --> 00:01:39,760
Speaker 1: to the global financial crisis, but I think it's a

27
00:01:39,840 --> 00:01:44,440
Speaker 1: much different environment and a much different situation for the bank.

28
00:01:44,600 --> 00:01:47,520
Speaker 1: The issue for the bank is really to solve a

29
00:01:47,560 --> 00:01:52,880
Speaker 1: profitability challenge. That the capital UH buffer is not as

30
00:01:52,960 --> 00:01:56,560
Speaker 1: big as as some other banks, but it's it's adequate.

31
00:01:57,000 --> 00:02:00,520
Speaker 1: Liquidity UM is good at the bank. We know that

32
00:02:00,520 --> 00:02:04,200
Speaker 1: that can change rather quickly UM. But again it's really

33
00:02:04,240 --> 00:02:07,360
Speaker 1: all about sort of the go forward look and what

34
00:02:07,400 --> 00:02:09,760
Speaker 1: the bank has to do UM to sort of improve

35
00:02:09,800 --> 00:02:13,840
Speaker 1: the structure the profitability challenge and not similar to some

36
00:02:13,880 --> 00:02:16,120
Speaker 1: of the insolvency issues that we were looking at in

37
00:02:16,160 --> 00:02:21,160
Speaker 1: the global financial Just putting out the memo worried some people.

38
00:02:21,360 --> 00:02:24,080
Speaker 1: So let's talk a little bit about this plan that

39
00:02:24,120 --> 00:02:26,320
Speaker 1: they come out with. Does it help if it's like

40
00:02:26,400 --> 00:02:30,320
Speaker 1: really aggressive, is that what investors are looking for? Or

41
00:02:30,360 --> 00:02:33,480
Speaker 1: would it be better if it's not so aggressive? Implying

42
00:02:33,760 --> 00:02:37,119
Speaker 1: the problem is not so severe. I think it's it's

43
00:02:37,120 --> 00:02:39,640
Speaker 1: going to be the plan is going to be tough

44
00:02:39,800 --> 00:02:43,240
Speaker 1: either way because UM, you know, the issue is that

45
00:02:43,280 --> 00:02:45,880
Speaker 1: the markets are tough. It's a challenging market for their

46
00:02:45,960 --> 00:02:49,880
Speaker 1: core businesses, and so UM likely there's going to be

47
00:02:50,120 --> 00:02:55,040
Speaker 1: patients required as such a plan is executed. So it's

48
00:02:55,120 --> 00:02:58,960
Speaker 1: it's tough to think about what they could say UM

49
00:02:59,000 --> 00:03:03,400
Speaker 1: in terms of an immedi it positive surprise. The best

50
00:03:03,440 --> 00:03:07,959
Speaker 1: case scenario could be that they are able to raise

51
00:03:08,040 --> 00:03:12,520
Speaker 1: some external capital UM to invest alongside some of their businesses.

52
00:03:12,560 --> 00:03:15,320
Speaker 1: I think that's what the bank would like to do. However,

53
00:03:16,120 --> 00:03:18,800
Speaker 1: you know, as as the market is tougher, the value

54
00:03:18,840 --> 00:03:23,400
Speaker 1: of these businesses UM also is that a cyplical low

55
00:03:23,480 --> 00:03:26,760
Speaker 1: point UM, and so that that really sort of pressures

56
00:03:26,800 --> 00:03:29,440
Speaker 1: the options. So you know, one option is they could

57
00:03:29,480 --> 00:03:32,720
Speaker 1: raise external capital for the entire bank. That looks less

58
00:03:32,720 --> 00:03:35,880
Speaker 1: attractive as as the stock keeps going down. The second

59
00:03:35,960 --> 00:03:39,160
Speaker 1: is to get external capital. But but whoever is providing

60
00:03:39,200 --> 00:03:42,920
Speaker 1: that capital is also going to want UM. You know,

61
00:03:43,040 --> 00:03:49,000
Speaker 1: some some reflection for UM current valuations, which which are

62
00:03:49,040 --> 00:03:52,120
Speaker 1: not great given where the market is. Yeah, the coastal

63
00:03:52,200 --> 00:03:55,440
Speaker 1: and sure credit sweeze against defaults is now higher than

64
00:03:55,480 --> 00:03:57,520
Speaker 1: it wasn't during the g FC, and when we sold

65
00:03:57,520 --> 00:04:00,640
Speaker 1: banks get into these kinds of difficulties. During in the GFC,

66
00:04:00,760 --> 00:04:03,280
Speaker 1: the talk was all about contagion risk. Is there any

67
00:04:03,320 --> 00:04:07,560
Speaker 1: contagion risk you I think I think the difference is

68
00:04:07,840 --> 00:04:11,320
Speaker 1: that in the Global Financial Crisis it was sort of

69
00:04:11,480 --> 00:04:14,400
Speaker 1: broadly across banks, and some banks worse than others. I

70
00:04:14,440 --> 00:04:18,240
Speaker 1: think in this particular case, UM, you know, for the

71
00:04:18,279 --> 00:04:22,440
Speaker 1: most part, we have UM, for example, in the US,

72
00:04:22,760 --> 00:04:26,880
Speaker 1: very strong banks, very strong capital levels, and you know,

73
00:04:26,920 --> 00:04:30,040
Speaker 1: one of the key uh, one of the key areas

74
00:04:30,080 --> 00:04:33,320
Speaker 1: where you can get UM I guess counterparty risk is

75
00:04:33,320 --> 00:04:35,760
Speaker 1: the prime brokerage business. That's a business that can be

76
00:04:35,800 --> 00:04:40,120
Speaker 1: impacted by sentiment. But they've largely exited that business. UM.

77
00:04:40,160 --> 00:04:42,800
Speaker 1: You know, they talked about revenues, you know, sort of

78
00:04:42,880 --> 00:04:45,960
Speaker 1: ninety percent of the revenues gone from that business, and

79
00:04:46,000 --> 00:04:49,040
Speaker 1: so that's a business that's more vulnerable. It's a business

80
00:04:49,040 --> 00:04:53,360
Speaker 1: that they're they're not in, so there's some limiting factor there.

81
00:04:53,600 --> 00:04:55,800
Speaker 1: I also think that you know, in an in an

82
00:04:55,880 --> 00:05:00,719
Speaker 1: environment where all banks, people are worried about all banks,

83
00:05:01,040 --> 00:05:05,360
Speaker 1: the one bank that UM you know sort of has

84
00:05:05,400 --> 00:05:11,039
Speaker 1: structural challenges. UM can be sort of the less attractive

85
00:05:11,080 --> 00:05:13,040
Speaker 1: of the lot, and so I think that's that's another

86
00:05:13,120 --> 00:05:16,680
Speaker 1: thing that you've been seeing. So everyone's are much likelihood

87
00:05:16,800 --> 00:05:19,600
Speaker 1: and they're they're they're trading off worse than others. Is

88
00:05:19,640 --> 00:05:21,920
Speaker 1: there likelihood that they'll speed up the release of this

89
00:05:22,200 --> 00:05:25,320
Speaker 1: strategy review to avoid three weeks of getting hit by

90
00:05:25,320 --> 00:05:30,640
Speaker 1: the market. It does seem that that UM, It does

91
00:05:30,680 --> 00:05:33,680
Speaker 1: seem that that's a potential. That's something that might help because,

92
00:05:34,080 --> 00:05:36,920
Speaker 1: as we saw, when management issues a comment it does

93
00:05:37,000 --> 00:05:40,240
Speaker 1: little to study things. You really need to get sort

94
00:05:40,240 --> 00:05:41,000
Speaker 1: of more action