Speaker 1: Bloomberg Audio Studios, podcasts, radio news. David, for anyone that
Speaker 1: questions my dedication to covering global finance for Bloomberg, I
Speaker 1: have a statistic for you.
Speaker 2: I'm sure no one dares question that fancy, but hit me,
Speaker 2: what's a stat.
Speaker 1: Since twenty fourteen, critis sweet c suite, mainly chief executives
Speaker 1: and chairman have given me thirty seven around thirty seven interviews,
Speaker 1: so we show up at every quarter to speak to them.
Speaker 1: We had many exclusives with various chief executives to trying
Speaker 1: to understand what was going on, and then boom, it
Speaker 1: got taken over.
Speaker 2: I mean that's going to be some sort of record,
Speaker 2: hasn't it in terms of the number evinties. Also tells
Speaker 2: you a bit about the company, though, doesn't it. Because
Speaker 2: there was so much going on, so much to report on.
Speaker 2: I mean, you had to chase the chief executives, as
Speaker 2: the chief financial officers to try and explain or defend
Speaker 2: perhaps what was happening.
Speaker 1: Probably defend. I mean there were a lot of scandals,
Speaker 1: and so we tried to keep on top of the story.
Speaker 1: And I remember sometimes in certain interviews I kept on
Speaker 1: thinking out the back of my mind this would be
Speaker 1: a great Netflix show, but it's a book.
Speaker 2: Maybe it should be a Netflix show one day. I mean,
Speaker 2: it is truly one of the great stories of business,
Speaker 2: of scandal, of failure. Over the last few years, we
Speaker 2: were all gripped by it here at Bloomberg, And in
Speaker 2: this week's episode of In the City, we're going to
Speaker 2: talk to perhaps the only person in the room here
Speaker 2: in London who's nerded out even more than New fran
Speaker 2: scene on Credit Swiss, and that is our very own
Speaker 2: Weekend Edition editor Duncan Mavin, whose book covers all the
Speaker 2: scandal's twist turns and the ultimate collapse of Credit Swiss.
Speaker 2: Welcome to the City of London, the City of the
Speaker 2: City of the City of London. Mind the gap between
Speaker 2: the and the financial hearts of the country, the city,
Speaker 2: the City. Welcome to in the City, clear of the doors.
Speaker 2: I'm Francin Laqua and I'm David Merritt. Well with us
Speaker 2: in the.
Speaker 1: Studio is Duncan Maven, Bloomberg editor and also best selling
Speaker 1: author of Meltdown, Scandal, Sleeze and the Collapse of Credit Sweez,
Speaker 1: which published earlier this year. Welcome Duncan, Thank you so
Speaker 1: Duncan you've joined Bloomberg. It's been six months. And before that,
Speaker 1: I mean you covered Credit sweez for years, decades.
Speaker 3: Yeah. I was an editor and a reporter for a
Speaker 3: long time, covering banks in Europe and around the world,
Speaker 3: and Credits Sweets was prominently in the news, often for
Speaker 3: bad reasons. So I was all over them for a
Speaker 3: long time.
Speaker 2: Yeah. So what prompted you to write this book.
Speaker 3: I sort of got into it through one of the scandals,
Speaker 3: the Green Salt scandal. Had written a book about that,
Speaker 3: and that Credit Sweet was really at the heart of it.
Speaker 3: And actually I think that scandal was a really big
Speaker 3: factor in Credit sweet Is downfall, and so I sort
Speaker 3: of knew a lot about the culture and things that
Speaker 3: went wrong there. And then when Credits Sweets collapsed, it
Speaker 3: was just this crazy story of scandal after scandal after scandal,
Speaker 3: relentlessly they were getting into trouble, and it felt like
Speaker 3: it kind of symbolized a lot of things that go
Speaker 3: wrong in banking, or can go wrong in banking.
Speaker 1: Duncan Green Selle. It was you know, this also implicated
Speaker 1: the UK, maybe more than other scandals, but it was
Speaker 1: a big deal. Remind us what happened.
Speaker 3: Yeah, So it gets a bit complicated. It's about this
Speaker 3: thing called supply chain finance, which we probably shouldn't get
Speaker 3: into because it's really arcane and difficult to talk about.
Speaker 3: But essentially Credit Sweet loan ten billion dollars of their
Speaker 3: client's money to have failed the UK financier named lex
Speaker 3: screen Cell, who was working with David Cameron, the former
Speaker 3: Prime Minister. So it blew up into a big kind
Speaker 3: of mainstream news story and all of the ten billion
Speaker 3: dollars was frozen. Clients got some of it back, not
Speaker 3: all of it back, and it turned out a lot
Speaker 3: of the money was invested in kind of real garbage stuff.
Speaker 3: It was supposed to be really safe and it wasn't.
Speaker 3: So that was a real sign that they were entrusting
Speaker 3: their clients' money and things that weren't great, and that
Speaker 3: was a real sign things were not good at Credit SUITEZ.
Speaker 2: Can we step back further in time, then, so the
Speaker 2: bank collapsed earlier on in twenty twenty three, but this
Speaker 2: succession of scandals that built up to its final implosion.
Speaker 2: Can we trace back to the origins Which of these
Speaker 2: scandals first emerged that showed that this bank was really
Speaker 2: in trouble?
Speaker 3: So yeah, in my book, I go right back to
Speaker 3: the start one hundred and sixty seven years ago. And
Speaker 3: when you look at the start, even at the start,
Speaker 3: Alfred Esher, who's this Swiss kind of icon who founded
Speaker 3: the bank. Even his family has kind of involved in
Speaker 3: financial scandals. His grandfather loses a whole load of money
Speaker 3: in a trading scandal in the early nineties. It was
Speaker 3: sort of in the DNA from the start. It is
Speaker 3: kind of in the DNA, yeah, you know. And I
Speaker 3: think Credit Sweets then becomes kind of the second biggest
Speaker 3: bank in Switzerland, and this a second tier investment bank
Speaker 3: when it merges with a US investment bank, and so
Speaker 3: it's kind of always pushing to try and be better.
Speaker 3: And I think that's one of the reasons that it
Speaker 3: kind of always is just pushing the envelope and getting
Speaker 3: into trouble. But then they have, you know, a lot
Speaker 3: of scandals after that. So in the in the seven
Speaker 3: sixty seventies is one called the Kiaso affair, which involves
Speaker 3: money coming from Italy over the border and they kind
Speaker 3: of putting it in a branch and then use it
Speaker 3: in a kind of Ponzi scheme way, and that blows up,
Speaker 3: and then you know there's a There are more through
Speaker 3: the nineties involving a group called the Flaming Ferraris. Here
Speaker 3: these traders in London who who blow up, and there's
Speaker 3: a bunch of scandals in Japan where they're they're shredding
Speaker 3: documents in Japan.
Speaker 2: You mentioned the Flaming Ferraris. Can we I think we
Speaker 2: just kind of did a little sidetrack on that because
Speaker 2: it's wasn't it your local restaurant front scene nam Loong
Speaker 2: where you could do Did you ever have a flaming Ferrari?
Speaker 1: I mean I can either confirm nor deny that I
Speaker 1: had flaming Ferraris in my youth. I thing most people have.
Speaker 2: This is the cocktail that you drink that's on far right.
Speaker 2: Don Can you tell us what the Flaming Ferrari gang were?
Speaker 3: So this was a group of high profile traders in
Speaker 3: London who in the late nineties, who were like the
Speaker 3: most celebrated in the city, and they used to go
Speaker 3: to this restaurant and drink this drink and they were
Speaker 3: on the front page of all the newspapers wearing their
Speaker 3: tuxedos and being really flashed and getting into Ferraris and
Speaker 3: so on, and driving around and and they were making
Speaker 3: more money than anybody else, and it turned out they
Speaker 3: were essentially inside of trading.
Speaker 2: There would go flamed out love it.
Speaker 3: I mean. The big one in the nineties for me,
Speaker 3: which kind of becomes a bit of a cliche, but
Speaker 3: I think is really worth talking about is how not
Speaker 3: just Credit Sweets but the Swiss banks in general, it's
Speaker 3: revealed how much they've been dealing with the Nazis and
Speaker 3: during the war. I think this is partly in their
Speaker 3: DNA because there's this banking privacy law in Switzerland that
Speaker 3: our secrecy law that enables them to kind of take
Speaker 3: in money from the Nazis, but also prior to the
Speaker 3: Second World War, they've taken money from Jewish victims of
Speaker 3: Nazism around Europe and then they kind of they keep
Speaker 3: that money and right through to the nineties until some
Speaker 3: American investigators come and say, hey, you know, you've got
Speaker 3: a bunch of money that was from Holocaust victims. Shouldn't
Speaker 3: you give it back? And Credits Sweets isn't the only one,
Speaker 3: but Crows Sweet is right at the forefront of trying
Speaker 3: to cover up what they've done during the war, So yeah,
Speaker 3: that scandal, and then you just kind of roll into
Speaker 3: the last twenty five years where it becomes really relentless.
Speaker 3: It's like a year after year after year there's a
Speaker 3: new scandal, like Credits sweets the d archae goos.
Speaker 1: I mean, number of scandals goes back to the heart
Speaker 1: I guess of risk taking. Yeah right, but UBS also
Speaker 1: had skeletons in their closet in the like the eighties nineties.
Speaker 1: So why did YOUBS clean up and Critisweez kept on
Speaker 1: taking these big, risky bets.
Speaker 2: Yeah.
Speaker 3: I think it's a really good point, right. The Credit
Speaker 3: Suite definitely has a lot of scandals. It's not the
Speaker 3: only bank. You know, a lot of banks breach sanctions.
Speaker 3: Cit seez isn't even the worst on that. A lot
Speaker 3: of banks have big road traders. UBS has one of
Speaker 3: the worst. A lot of banks have scandals. The difference
Speaker 3: with Credit Sweez is that they're relentless, that they're year
Speaker 3: after year after year after year. Most banks, some scandal happens,
Speaker 3: they try and tidy up, and UBS's case, I think
Speaker 3: in particular because of the financial crisis, they have this moment,
Speaker 3: you know, they take a government bailout and Credits Suite
Speaker 3: sort of proudly says it didn't take a government bailout,
Speaker 3: but ubs had to because of that, I think they
Speaker 3: get a chance to kind of restructure and wipe the
Speaker 3: slate clean.
Speaker 1: When there's a big crisis or there's a big scandal,
Speaker 1: you have to go to the heart of why it
Speaker 1: was started. Is it because they didn't see it so
Speaker 1: o kags. They just didn't see it and they thought
Speaker 1: he was legit. Or is it because they turned to
Speaker 1: blind eye and said, well, it's worth it because returns
Speaker 1: are big. We need the money, we need to press shareholders,
Speaker 1: so we'll go ahead and do it. Anyway.
Speaker 3: Yeah, I think it's a bit of both. So let's
Speaker 3: talk about the Mozambique Tuna bond scandal, which is they
Speaker 3: do a deal with some a Lebanese company that is
Speaker 3: building infrastructure from Mozambique, and they get a report done
Speaker 3: by an investigator into the most the Lebanese company to
Speaker 3: say should we do business with these guys? And the
Speaker 3: report comes back and it calls the Lebanese company the
Speaker 3: King of kickbacks. It talks about them, you know, always
Speaker 3: taking bribes, offering bribes and credit sweet looks at it. It
Speaker 3: goes right through all their risk committees. They look at
Speaker 3: this report and they eventually say it's going to make
Speaker 3: a lot of money. Let's ignore the report, and they
Speaker 3: continue to do the business. And of course what happens.
Speaker 3: You know, the Lebanese guys offer two hundred million dollars
Speaker 3: in kickbacks to Mozambique officials and also to a credit
Speaker 3: sweet banker. In that case, I'd say it's because they
Speaker 3: see the money and they just go for it. Then
Speaker 3: in the case of Archagots, I think it's slightly different.
Speaker 3: I think they do end up in a position at
Speaker 3: that point where so archae Goos is this big hedge fund,
Speaker 3: and they lend it too much money, and then when
Speaker 3: Archaegas collapses, they're too slow to get out. I think
Speaker 3: in that case it isn't so much that they are
Speaker 3: chasing the money because all of the banks are lending
Speaker 3: to Archagas. It's that their risk functions just aren't working
Speaker 3: very well at that point.
Speaker 2: Someone listening to this he doesn't follow the difference between
Speaker 2: banks and different countries might think, hang on a minute,
Speaker 2: Swiss banks are supposed to be well. Switzerland are supposed
Speaker 2: to be safe, possibly a little boring secret as you
Speaker 2: mentioned as well, So it might be a bit of
Speaker 2: a surprise that actually the hotbed of scandal and excessive
Speaker 2: risk taking was sitting in this over a century year
Speaker 2: old Swiss institution. Is it connected to the secrecy part?
Speaker 2: I mean, why under when you look under the hood
Speaker 2: of this Swiss institution, were they not adequately protecting themselves
Speaker 2: against risk?
Speaker 3: Yeah. So I think there's a unique thing with Swiss
Speaker 3: in that it's half a Swiss bank and half a
Speaker 3: hard charging Wall Street City of London investment bank, and
Speaker 3: that is really unique. And those two things are constantly attention.
Speaker 3: They fight all the time over pay, really kind of
Speaker 3: in public that the Swiss approach to pay as well,
Speaker 3: they get really well paid, but don't talk about it.
Speaker 3: The American approach to payers. We want to talk about
Speaker 3: how well paid we are. And so there's two things
Speaker 3: that are like constantly constantly fighting each other. But I
Speaker 3: think it is really worth looking at the Swiss piece
Speaker 3: in particular. So I think there was an element in
Speaker 3: Switzerland while all of this was unfolding of saying this
Speaker 3: was just the Americans. It was the Americans getting us
Speaker 3: in trouble and that's not true if you look at
Speaker 3: the Nazi stuff, that is nothing to do with the Americans.
Speaker 3: That's purely Swiss. There are a couple of other scans,
Speaker 3: as one with a guy named Patrice Les Goodron who
Speaker 3: is a private banker deals with high net worths from
Speaker 3: Eastern Europe in particular and essentially steals money from a
Speaker 3: lot of very wealthy Eastern Europeans. And that happens in Switzerland,
Speaker 3: and I think part of it is that Swiss Secrecy Act, which,
Speaker 3: if you think about it, right, what does that attract.
Speaker 3: Sometimes it attracts people who legitimately have a concern that
Speaker 3: you know, governments might come after their money on fairly.
Speaker 3: But it is also inevitable that that will attract dictators
Speaker 3: and organize crime and oligarchs and so on who also
Speaker 3: want to hide their money from authorities.
Speaker 1: There was a pretty big turnover of chief executives right
Speaker 1: for I think in about ten years when you look at,
Speaker 1: you know, what was their role in risk taking? And
Speaker 1: again and I heard a lot from the leadership of
Speaker 1: Crety Sweets and saying, well, you know, you have a
Speaker 1: group of rainmakers or a group of traders in London
Speaker 1: and in New York that were not listening to the
Speaker 1: rules for a long time, but you're pushing back against that.
Speaker 3: Yeah, so I think you're right to point to the
Speaker 3: turnover of chief executives. My view is that that's critical
Speaker 3: and the end of sweet. Part of what happens there
Speaker 3: is every new CEO is dealing with crises that often
Speaker 3: evolved under the previous CEO. So they land and the
Speaker 3: first thing that lands on their play is a scandal
Speaker 3: from the last guy. So you can barely get going
Speaker 3: before you're dealing with some multi billion dollar scandal that
Speaker 3: has nothing to do with you, and then inevitably you
Speaker 3: set up a bunch of scandals for the next person
Speaker 3: to pick up. So I think that's really important. None
Speaker 3: of them really get to grips with that. I think
Speaker 3: because they're kind of second tier, both in Switzerland and
Speaker 3: on Wall Street, they're kind of second tier. They're not
Speaker 3: quite the best, and so they're willing to kind of
Speaker 3: turn a blind eye a little bit. They get and
Speaker 3: I think they all get upset. All the CEOs and
Speaker 3: chairmen are upset about the culture of pushing things, but
Speaker 3: they all inevitably accept it because that's the only way
Speaker 3: to generate profits. What happens at the end And make
Speaker 3: this point in my book. You know you said four
Speaker 3: in the last ten years or so, Actually in the
Speaker 3: end they when it comes right to the anacots sweet
Speaker 3: They've got a new CEO, a new chairman, a new
Speaker 3: chief risk officer, and new chief of the investment, a
Speaker 3: new head of communications, and your chief legal counsel. Everybody's
Speaker 3: been there for about six to twelve months, and so
Speaker 3: when they kind of hit with a big crisis right
Speaker 3: at the end, there's really nobody there who's got any
Speaker 3: institutional knowledge of how to deal with it. And I
Speaker 3: think on top of that, the Swiss authorities look at
Speaker 3: them and say, well, what do you guys know, you've
Speaker 3: hardly been here. It's time to close the bank down.
Speaker 2: Can you take us back then to those few days
Speaker 2: there's very dramatic days in twenty twenty three when all
Speaker 2: these things came to a head. So you've got this
Speaker 2: inexperienced team running the shop. You've got losses coming through
Speaker 2: from the scandals that you mentioned. How did it actually
Speaker 2: transpire that this bank effectively vanished in the space of
Speaker 2: a few days.
Speaker 3: So you have to start really a few months before that.
Speaker 3: So a few months before that, if you remember, this
Speaker 3: was kind of a big deal at a time, there
Speaker 3: was a tweet by an Australian journalist who doesn't really
Speaker 3: cover global investment banks or anything like that, and he
Speaker 3: tweeted out words to the effect of credible tells me
Speaker 3: big global bank on the brink, and that was it
Speaker 3: didn't mention from Australia. And he tweets out this thing,
Speaker 3: which seems pretty innocuous on the surface, but for some
Speaker 3: reason people decide that that is Credit Sweet, and I
Speaker 3: think that some reason is because it's had all these scandals.
Speaker 3: What then happens is this kind of escalates on social
Speaker 3: media and you get this kind of crazy scene where,
Speaker 3: especially in Asia, people are tweeting it out with charts
Speaker 3: and things that show that it really is Credit Sweet.
Speaker 3: The tweet gets taken down, by the way, but in
Speaker 3: the meantime, about one hundred billion dollars has been pulled
Speaker 3: out of Credit Sweets in a matter of a few days,
Speaker 3: so the bank is seriously weakened. And at that point,
Speaker 3: so this is a few months before it collapses, they
Speaker 3: really really thought it was going to collapse. In fact,
Speaker 3: the communications team had already written in October twenty twenty two,
Speaker 3: they had written the press release for the end of
Speaker 3: Credit Sweet, because that's how it run is happening on
Speaker 3: the bank gets to run on aut of a global
Speaker 3: digital run is sparked by that tweet exactly.
Speaker 1: But it took a long time for the communications team
Speaker 1: to actually put anything out.
Speaker 3: Yeah, it was almost silent. I think this was partly
Speaker 3: the new CEO and new chairman, who were sort of
Speaker 3: rabbits in the headlights, didn't know what to do. Fortunately
Speaker 3: for them at the time, or at least they think
Speaker 3: it's fortunate they managed to kind of slow this down.
Speaker 3: Panic kind of subsides for a little while, and then
Speaker 3: you get into twenty twenty three and pretty fragile. The
Speaker 3: state of the bank's quite fragile, and there's a bunch
Speaker 3: of other little scandals kind of erupting around it. And
Speaker 3: then you get the Silken Valley Bank thing in the US,
Speaker 3: which kind of creates more fragility in the whole system.
Speaker 3: And I think it's hard to recall now, but at
Speaker 3: that time, it really felt like there was a potential
Speaker 3: for another global financial crisis. You know, there were two
Speaker 3: or three banks teetering in the US and In fact,
Speaker 3: what you get is kind of yelling and Karen Kellisuta,
Speaker 3: who's the Swiss finance minister, and you know, finance ministers
Speaker 3: around the world kind of communicating to say, we need
Speaker 3: to stop this right now. And so Cali Suita in Switzerland.
Speaker 3: She was also new right she'd only got into her
Speaker 3: spot in the January I think. She looks around the room,
Speaker 3: woman says, how am I going to stop sweet's blowing
Speaker 3: up Switzerland and potentially the world's financial system. She looks
Speaker 3: at the CEO and chairman says, do I trust these
Speaker 3: guys to fix it?
Speaker 1: Maybe not, but don't get it so I remember, you know,
Speaker 1: And it took about two months to actually convince the
Speaker 1: leadership to come on after that October twenty twenty three
Speaker 1: because outflows were, you know, pouring out. And then we
Speaker 1: finally get to the chairman in December. He comes to London,
Speaker 1: speaks to us for fifteen minutes and he says, look,
Speaker 1: things are slowly getting better. Yeah, so they have a
Speaker 1: bit of a respite. So at that point, what's what's
Speaker 1: the concern? Is it liquidity?
Speaker 3: Is the run continuing?
Speaker 1: Yes, it's outflows. It's basically people are saying we're getting out,
Speaker 1: we're getting out, we're getting well.
Speaker 3: That's doing is you know, that means their profitability is
Speaker 3: getting worse and worse. Right, if the money is coming out,
Speaker 3: that's fees disappearing. So the profitability problem they had before
Speaker 3: is now significantly worse.
Speaker 1: But there's no solvency concerns and there's no liquidity concern
Speaker 1: And I think that's important because then there was something
Speaker 1: happening three months afterwards where people were in a panic,
Speaker 1: but just wasn't there on the.
Speaker 3: Yeah, the problem it had and the reason that my
Speaker 3: book is focused on all the scandals is the problem
Speaker 3: it had was its reputation was ruined. It's did people
Speaker 3: trust the bank? And the problem with the bank is,
Speaker 3: you know, if people don't trust it, it's finished. If
Speaker 3: nobody wants to put their money there, you don't have
Speaker 3: a bank anymore. And so that really is what happens
Speaker 3: I think over that few months. I mean they also
Speaker 3: mess up all the time. So the chairman said at
Speaker 3: that time, around that time, we've seen money flowing back
Speaker 3: into the bank, which wasn't true. That was a lot
Speaker 3: well he said he made a mistake or he misspoke
Speaker 3: as something he was under real serious pressure whether he
Speaker 3: said something that was absolutely wrong and illegal. Days before
Speaker 3: they collapse, actually the SEC told them they couldn't publish
Speaker 3: their annual annual report because it had errors in it,
Speaker 3: which in and of itself, had they not collapsed, would
Speaker 3: have been another enormous.
Speaker 2: Scandal to what was the final The final straw.
Speaker 3: The final straw, I think really was what was happening
Speaker 3: in the US, and that there was a sense that
Speaker 3: this cannot go any further. I think this swisk government,
Speaker 3: Swiss authorities were worried that it was starting to affect
Speaker 3: Switzerland and maybe it would affect ubs. Two, that there's so
Speaker 3: much money coming out of credits Swiss that it was
Speaker 3: starting to damage the frank and it could start to
Speaker 3: do so.
Speaker 2: It was moving the Swiss currency. It was being damaged
Speaker 2: by the amount of money being pulled out of the bank.
Speaker 3: In the previous October with the Twitter thing, that'd mostly
Speaker 3: be money in Asia and they could kind of handle it.
Speaker 3: I mean, it was a disaster, but it was much
Speaker 3: worse when the following February March, Swiss people started to
Speaker 3: put their money out and move it oversea, move it
Speaker 3: outside of Switzerland, and so that gave them a real problem.
Speaker 3: And as I say, I think you know the Finance
Speaker 3: Minister knew in her spot with Janet Yellen on the
Speaker 3: phone saying this needs to end right now, is kind
Speaker 3: of looking around and saying how do I solve this?
Speaker 1: But why was the US involved? I mean, this is
Speaker 1: after so basically you seemed to suggest sunk and that
Speaker 1: they never really had a chance. But it definitely came
Speaker 1: to a head with an interview that we did in
Speaker 1: the Middle East with the Saudi National Bank where they
Speaker 1: had around ten percent of credits and where he says, look,
Speaker 1: he wouldn't buy any more shares. And so that's when
Speaker 1: that was kind.
Speaker 2: Of the point, just like no way or.
Speaker 1: Is that when Yellen gets involved.
Speaker 3: It was all around the same time. So within sort
Speaker 3: of a period of about seventy two hours, you've got
Speaker 3: their accounts. They're not allowed to publish your accounts because
Speaker 3: the SEC says have got a problem. They've got Silken
Speaker 3: Valley Bank and others collapsing in the US and a
Speaker 3: concern of a broader global financial crisis. You've got the
Speaker 3: Saudi National Bank chairman saying we're not going to put
Speaker 3: any more money in, which also got misread by many
Speaker 3: people as because it was SNB, the Swiss National Bank,
Speaker 3: so that kind of literally, you know, it sounds crazy,
Speaker 3: but it definitely confused some investors. SNB so as we're
Speaker 3: not putting any money into Swiss is much worse than
Speaker 3: Saudi National Bank. So yeah, all these things happening right there.
Speaker 3: And I think the sense if well, if you speak
Speaker 3: to the people at the top of crot Swie at
Speaker 3: that time, some of them will still say that there's
Speaker 3: no need for the bank to collapse. We had a plan,
Speaker 3: we would solve this, it would have all been okay.
Speaker 3: I think that's you know, possible. But if you're the
Speaker 3: Swiss authorities and you're looking at that bank at that
Speaker 3: point and there's a potential financial crisis, you I don't
Speaker 3: know if you trust those people to fix it. And
Speaker 3: so I think you look at UBS and you go, actually,
Speaker 3: you guys, take it. Can you solve it? If you
Speaker 3: take it at all? This all ends right now, and
Speaker 3: so I think that's kind of a logic. Gar you know,
Speaker 3: time will tell whether it was a good decision, and
Speaker 3: the implications for UBS, I think are huge, but I
Speaker 3: think it's understandable why you would do that if you're
Speaker 3: the Swiss southority.
Speaker 2: So when it becomes clear so that the Swiss government
Speaker 2: are panicking or worried at least the currency is starting
Speaker 2: to move on this, so they swoop in and tell UBS, effectively,
Speaker 2: you've got to buy this failure bank. Did they want
Speaker 2: to do it?
Speaker 3: I think for UBS it's a massive opportunity, right to
Speaker 3: pick up a pick up their big rival for next
Speaker 3: to nothing. Essentially in banking terms, it's next to nothing.
Speaker 3: In the end, they pay about three billion dollars and
Speaker 3: get a whole load of indemnities to protect them from
Speaker 3: the kind of what could happen because of all the
Speaker 3: scandals that are still lingering. But they get the bank
Speaker 3: for essentially a song. And you see that in their
Speaker 3: first set of results after the crisis.
Speaker 1: The deal of a century.
Speaker 3: Yeah, right, amazing.
Speaker 1: What did you learn about you know, the financial system
Speaker 1: in the book? I mean as a secret that you
Speaker 1: have to have that drawer with a template of if
Speaker 1: a competitor goes back and you know, will take you
Speaker 1: under it, you have to have a plan or.
Speaker 3: I think the thing that I found most interesting is
Speaker 3: the tolerance for bad behavior that this massive global bank
Speaker 3: could go on forever and ever, you know, at least
Speaker 3: till for one hundred and sixty seven years without collapsing.
Speaker 3: It is incredible considering how many times they were in
Speaker 3: trouble and so actually I sort of started out with
Speaker 3: the question of how does a big global bank like
Speaker 3: this collapse? And at some point I was kind of
Speaker 3: asking myself, why didn't this bank collapse earlier? It's sort
Speaker 3: of the other way around. Why did it not go Elliott?
Speaker 3: Somebody should have shut it down twenty or thirty years ago.
Speaker 2: Duck, Thank you fantastic, Thanks so much time. It was
Speaker 2: really good.
Speaker 3: It was so good.
Speaker 1: Thanks for listening to this week's In the City from Bloomberg.
Speaker 1: It was hosted by me Francin Laqua and David Merritt.
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