WEBVTT - Bloomberg Daybreak Weekend: A Week of Bank Chaos 0:00:01.920 --> 0:00:05.440 This is Bloomberg Daybreak Weekend. I'm Tom Busby in New York. 0:00:05.559 --> 0:00:08.039 This week a special edition of the show after what's 0:00:08.039 --> 0:00:11.600 been in historic week in the financial markets, marked by 0:00:11.640 --> 0:00:15.160 crisis in the global banking industry. The meltdown of Silicon 0:00:15.240 --> 0:00:18.880 Valley Bank spread across the sector, touching signature bank first 0:00:18.920 --> 0:00:21.959 Republic and then to Europe and Credit Suis. It's a 0:00:21.960 --> 0:00:24.760 story that played out right here on Bloomberg in exclusive 0:00:24.760 --> 0:00:27.440 interviews that move shares of Credit Suite throughout the week. 0:00:27.880 --> 0:00:30.440 On this show, we usually look forward, but today we're 0:00:30.480 --> 0:00:33.519 looking back, covering the timeline of events that got us 0:00:33.600 --> 0:00:36.479 where we are right now. Full disclosure, we're taking this 0:00:36.560 --> 0:00:40.080 program on Friday, so it's decidedly a look back and 0:00:40.280 --> 0:00:42.400 not a view of what's to come. But stay tuned 0:00:42.400 --> 0:00:45.000 to our news updates every thirty minutes throughout the weekend 0:00:45.040 --> 0:00:48.559 for the latest developments. We start on Wednesday morning. The 0:00:48.640 --> 0:00:52.160 chair of Credit Suis's largest shareholder, the Saudi National Bank, 0:00:52.440 --> 0:00:56.120 spoke to Bloomberg saying he wasn't open to injecting further 0:00:56.240 --> 0:00:59.400 cash into the Swiss lender. The answer is absolutely not, 0:01:00.080 --> 0:01:04.560 for many reasons outside the simplest reason, which is regulatory 0:01:04.680 --> 0:01:08.560 and statutory We now own nine point eight percent of 0:01:08.560 --> 0:01:10.800 the bank. If we go abuff ten percent, all kinds 0:01:10.840 --> 0:01:14.160 of new rules kick in. More on that interview later 0:01:14.200 --> 0:01:17.200 this hour. It caused Credit Suite's share price to tumble 0:01:17.200 --> 0:01:19.959 to a new record low, sparking concern about the strength 0:01:19.959 --> 0:01:23.319 of global lenders after the swift collapse of three US 0:01:23.360 --> 0:01:26.319 banks in the last week. Now. On Thursday, the CEO 0:01:26.319 --> 0:01:28.840 of Credit Sweee told his staff to focus on facts 0:01:28.959 --> 0:01:31.600 as he pledged to rapidly move ahead with a plan 0:01:31.720 --> 0:01:35.520 to streamline operations. In a memo to staff, Ulric Corner 0:01:35.600 --> 0:01:38.320 said the bank would continue to focus on the transformation 0:01:38.360 --> 0:01:41.759 of Credit Suites from a position of strength. That memo 0:01:41.840 --> 0:01:44.160 came after the bank said it reached an agreement with 0:01:44.240 --> 0:01:47.120 the Swiss National Bank to borrow as much as fifty 0:01:47.160 --> 0:01:51.360 four billion dollars from a liquidity facility. Flashback to Monday, 0:01:51.400 --> 0:01:54.800 that same CEO was on Bloomberg telling off Francine Laquis 0:01:54.880 --> 0:01:58.200 that the bank had seen inflows of client funds, which 0:01:58.200 --> 0:02:01.920 happened after markets and banks were pummeled by the collapse 0:02:01.960 --> 0:02:04.800 of Silicon Valley Bank. So as we be, as you know, 0:02:04.880 --> 0:02:09.040 it's a very recent thing which happened so far, it's 0:02:09.080 --> 0:02:15.160 pretty calm even so material good inflows yesterday. Still Also, 0:02:15.400 --> 0:02:17.240 you know, I had a client meeting which was very 0:02:17.240 --> 0:02:20.000 positive on everyone. So so far it's cold, but I 0:02:20.000 --> 0:02:22.520 think it's early days to look at the calm. Are 0:02:22.560 --> 0:02:25.440 you suggesting that you could also actually get inflows? We 0:02:25.560 --> 0:02:28.520 got them yesterday, which is a positive sign, I would say, 0:02:29.520 --> 0:02:31.959 and you know, for us, and that is maybe a 0:02:32.000 --> 0:02:33.680 little bit if I may say so, fun seeing in 0:02:33.680 --> 0:02:36.240 comparison to SVB, it's a very different situation. You know, 0:02:36.360 --> 0:02:39.519 we are GCP, as you know, we are following materially 0:02:39.760 --> 0:02:42.560 different and higher standards when it comes to capital funding, 0:02:42.639 --> 0:02:45.200 liquidity and so on. And that's why we said, you know, 0:02:45.240 --> 0:02:47.959 we gave I think this situation is important. We gave 0:02:48.520 --> 0:02:52.320 r capital ratio of like hundred and forty forty at 0:02:52.400 --> 0:02:54.519 the at the end of Q four, which is strong ratio, 0:02:54.800 --> 0:02:57.720 which has improved as we went through this quarter to 0:02:57.840 --> 0:03:01.000 like hundred and fifty on average and being even high 0:03:01.040 --> 0:03:05.239 on that. But so outflows have not reversed, but they've 0:03:05.280 --> 0:03:10.440 actually lowered. What are they reversing? Look, they have significantly moderated. 0:03:10.480 --> 0:03:12.640 As I put it, we gave an update on February 0:03:12.760 --> 0:03:14.840 nine in terms of where we are deposits and add 0:03:14.960 --> 0:03:16.959 ass and so only we give next update with the 0:03:17.000 --> 0:03:20.040 first quarter result. But this is also very clear. You 0:03:20.080 --> 0:03:22.239 know if and we talked about that, what has happened 0:03:22.280 --> 0:03:26.480 in like fourth quarter. You know, we are fully focused 0:03:26.520 --> 0:03:28.960 on it, turn it around, but that takes longer than 0:03:29.040 --> 0:03:31.400 like just two months. But then you do you have 0:03:31.480 --> 0:03:34.840 this material weakness today? What happened there? There's concern that 0:03:34.960 --> 0:03:38.080 actually almost every day there's some kind of bad news 0:03:38.080 --> 0:03:40.000 and you have your share price at a record low 0:03:40.040 --> 0:03:42.480 like that can't be a comfortable position, no, But we 0:03:42.960 --> 0:03:45.960 published our report today as we have seen the financial result. 0:03:46.040 --> 0:03:48.920 I think that's a key message. The financial result is 0:03:49.000 --> 0:03:53.520 unchanged for twenty twenty two and previous years. We delayed 0:03:53.560 --> 0:03:56.240 the reporters you have seen a couple of days to 0:03:56.600 --> 0:04:00.960 approbately deal with you know question the SEC head and 0:04:01.040 --> 0:04:05.400 we did, and that is part of an longer ongoing dialogue. 0:04:05.800 --> 0:04:08.720 And we acknowledge that we haven't metier weakness in the 0:04:08.800 --> 0:04:14.640 financial independential reporting control, which we are addressing and imediating forcefully. 0:04:15.280 --> 0:04:17.040 How are you addressing that? So is that an auditor 0:04:17.120 --> 0:04:20.360 problem had PwC on the case. Is it their fault? No, 0:04:20.440 --> 0:04:23.279 it's absolutely not their fault. That is obviously you know 0:04:23.360 --> 0:04:25.960 that cause higher hand in hand as you work together 0:04:26.000 --> 0:04:28.520 with your auditor. But it's a collective fining and we 0:04:28.520 --> 0:04:31.080 are addressing it. We have immediation planner. We are addressing it. 0:04:31.320 --> 0:04:34.279 So you have an anchor investor that put one point 0:04:34.320 --> 0:04:37.120 five million in the bank, now their share value has 0:04:37.160 --> 0:04:40.080 gone down by one third? Will they have to inject more? 0:04:40.160 --> 0:04:43.080 What kind of conversations are you having with them? No, Look, 0:04:43.160 --> 0:04:45.719 nobody is pleased develot the Shaperrice development, you know, but 0:04:45.800 --> 0:04:47.760 we match what we can match. And this is the 0:04:47.839 --> 0:04:50.480 execution of our plan. That's a white swag. This is 0:04:50.480 --> 0:04:53.320 a white plan. We are executing at pace and even 0:04:53.320 --> 0:04:55.520 ahead of the plan. And I think I'll shall to 0:04:55.600 --> 0:04:58.960 see that as well. That's an unpleasant situation. Chaprice for Dicom, 0:04:59.000 --> 0:05:02.360 manage Chaprice, manage the executioner. I do. So you don't 0:05:02.360 --> 0:05:05.560 think you're getting pressure from shareholders. You're not getting pressure 0:05:05.640 --> 0:05:08.080 from you know, certain big shareholders to do more and 0:05:08.120 --> 0:05:10.120 actually to have all options on the table now as 0:05:10.120 --> 0:05:12.680 I said, they are obviously they're obviously not pleased with 0:05:12.760 --> 0:05:15.800 the development. I'm not pleased with developing the first tent obviously, 0:05:15.880 --> 0:05:18.680 but you know, we are executing, and once we are executing, 0:05:18.720 --> 0:05:20.919 step by step, we show the marketing. This is exactly 0:05:20.920 --> 0:05:23.599 why we said it's this wee years process and we 0:05:23.640 --> 0:05:25.720 are executing, and that is you know, the market will 0:05:25.720 --> 0:05:28.760 acknowledge that and the share proce will follow. Do you 0:05:28.760 --> 0:05:30.880 think all options should be on the table? What about 0:05:30.880 --> 0:05:33.039 breaking up the bank? If you look and I understand 0:05:33.160 --> 0:05:35.280 your frustration with the share price and saying, look, you're 0:05:35.279 --> 0:05:37.120 just executing, but when you look at the share price 0:05:37.279 --> 0:05:41.240 ninety seven percent below that two thousand and seven high, 0:05:41.560 --> 0:05:43.600 like how do you regain from that now? But that 0:05:43.760 --> 0:05:45.960 you can can compare as you know, But you know, 0:05:46.440 --> 0:05:50.320 as I said, it's a right swatgy and fully fully 0:05:50.360 --> 0:05:53.360 convinced off the swagy. We are executing at past we 0:05:53.440 --> 0:05:56.080 have the right team, and you know that's why we 0:05:56.120 --> 0:05:58.719 said in October it needs radical change. You know, the 0:05:58.760 --> 0:06:01.120 bank needs to be changed, and we said it's the 0:06:01.160 --> 0:06:03.880 three years transformation. And you can't come after two months 0:06:03.920 --> 0:06:06.800 and say, look why is not everything done? But radical 0:06:06.880 --> 0:06:08.760 change could be splitting off the bank. Is it something 0:06:08.800 --> 0:06:11.880 that you're valuing. Oh look, the new creates vices focused 0:06:11.920 --> 0:06:14.799 on the course lengths of the bank. This is routs management, 0:06:14.800 --> 0:06:17.839 the swisspend passons asset management. What we put the market 0:06:17.839 --> 0:06:22.279 either trading and sales business that makes entirely sense, entirely 0:06:22.320 --> 0:06:26.880 different risk profile, will be very profitable and well reward shareholders. 0:06:26.880 --> 0:06:29.400 And I think the shelters understand it. When will you 0:06:29.480 --> 0:06:32.160 be able to say, like the worse is really behind us? 0:06:32.640 --> 0:06:35.240 But we said it's three years transformation. We said we 0:06:35.240 --> 0:06:38.000 are going to make a loss unfortunately this year because 0:06:38.320 --> 0:06:40.360 you know, and this is something which you need to understand, 0:06:40.400 --> 0:06:43.640 a lot of the restructuring course you know, baked into 0:06:43.640 --> 0:06:46.960 the transformation are coming in twenty twenty three before we 0:06:46.960 --> 0:06:50.240 see a lot of benefits out of that transformation. And 0:06:50.240 --> 0:06:52.080 that is something which happens. That's why we said it 0:06:52.120 --> 0:06:54.479 takes three years. Three years is a long time work. 0:06:54.520 --> 0:06:55.840 I mean a lot of us, but a lot of 0:06:55.880 --> 0:06:58.680 the shareholders will start asking questions. I mean, have you 0:06:58.720 --> 0:07:01.680 asked them for more money to make it faster? For years, 0:07:01.760 --> 0:07:04.000 especially in this banking world, than anything could happen. No, 0:07:04.160 --> 0:07:06.600 But you know, as I said, our LCR ratio is 0:07:06.920 --> 0:07:10.400 strong and very strong, has has has getting stronger as 0:07:10.400 --> 0:07:13.320 we speak. Our capital ratio is very strong at fourteen 0:07:13.360 --> 0:07:16.040 point one percent as we gave it to Q four, 0:07:16.120 --> 0:07:19.080 So we have everything we need to go through a transformation, Maise. 0:07:19.400 --> 0:07:21.440 Or are you expecting, you know, the first quarter to 0:07:21.480 --> 0:07:24.600 be good enough to keep shareholders off your back? The 0:07:24.680 --> 0:07:27.360 first quarter is, as we said, and we put it 0:07:27.480 --> 0:07:29.960 very clearly, we will make a loss in the first quarter, 0:07:30.000 --> 0:07:32.680 but you will see progress in the first quarter numbers 0:07:32.680 --> 0:07:37.120 in terms of what outflows in certain business momentum. We're 0:07:37.160 --> 0:07:40.560 specifically businessman in the market business for example, which was 0:07:40.720 --> 0:07:44.400 as we all discussed for the for four reasons, clearly 0:07:44.480 --> 0:07:47.480 understandable reasons. A week in the Q four looks better. 0:07:47.840 --> 0:07:50.840 We else management, we are making progress, certainly not yet 0:07:50.840 --> 0:07:53.320 there where we should be, but we are making progress. 0:07:53.720 --> 0:07:56.160 Or are you comfortable with the banking system as a whole? 0:07:56.160 --> 0:07:59.080 I mean, we've we've lived through a pretty incredible couple 0:07:59.080 --> 0:08:00.960 of days and if you look at the markets are 0:08:00.960 --> 0:08:03.520 all over the place. No, I think so, I mean 0:08:03.560 --> 0:08:06.240 this is this is somewhat an isolated problem. If you 0:08:06.320 --> 0:08:08.240 want too and as I said, you know, if you 0:08:08.280 --> 0:08:10.440 are gusipit or if you look at the large banks. 0:08:10.800 --> 0:08:12.960 I think we will manage to it. Talk to me 0:08:12.960 --> 0:08:15.040 a little bit about Cratie Sweets First Boston. So first 0:08:15.080 --> 0:08:17.880 of all, what's the timeline for the IPO. The timeline's 0:08:17.880 --> 0:08:20.240 fan seen is unchanged as it discussed last time. So 0:08:20.320 --> 0:08:22.400 we have a very clear plan to put it into market, 0:08:23.360 --> 0:08:26.000 create an liquidity event most likely in IPO. We are 0:08:26.000 --> 0:08:29.880 working against our internal plans forcefully, and I would expect 0:08:29.880 --> 0:08:31.760 such an event in like twenty twenty five. As I 0:08:31.800 --> 0:08:34.120 said earlier, Okay, any news I mean today you had 0:08:34.440 --> 0:08:36.319 news about the you know, twenty percent that would go 0:08:36.360 --> 0:08:40.920 to Critzwe's First Boston partners. What happens to the rest? Right? 0:08:41.040 --> 0:08:44.720 The rest is owned by us and obviously also portioned 0:08:44.720 --> 0:08:48.520 by Michael as we as we announce it in like February, 0:08:49.080 --> 0:08:51.000 and the rest is own past So this is this 0:08:51.120 --> 0:08:54.400 is our Our part of the bank remains all part 0:08:54.400 --> 0:08:56.840 of the bank. We are going into liquidity and again 0:08:56.920 --> 0:09:00.319 most likely IPO. You will be probably a majority and 0:09:00.400 --> 0:09:03.280 let me make decision. You know how our holding develops 0:09:03.280 --> 0:09:05.640 over the next following in So you're still looking for 0:09:05.679 --> 0:09:10.560 an anchor investor? Are you closer to finding well? I 0:09:10.600 --> 0:09:13.280 don't know. We are close to but I'm not sure 0:09:13.280 --> 0:09:15.560 if it's anchor investor. We have a lot of interest 0:09:16.280 --> 0:09:19.040 from sir parties to be invested into that. It tells 0:09:19.040 --> 0:09:21.840 you something about the surge, I would say, and we 0:09:21.880 --> 0:09:26.559 are evaluating that Middle Eastern investors, different kinds of investors, 0:09:26.559 --> 0:09:28.599 different parts of the world. A couple of weeks it 0:09:28.640 --> 0:09:30.920 will come before the first quarter. I will tell the 0:09:31.000 --> 0:09:32.880 market if we are there. What do you find most 0:09:32.880 --> 0:09:37.560 difficult about your job is to make it understandable. I 0:09:37.640 --> 0:09:40.520 would say, you know that we are absolutely doing the 0:09:40.600 --> 0:09:43.720 right things that we need some time to get through. 0:09:44.960 --> 0:09:47.600 And and this is what all my colleagues and I 0:09:47.800 --> 0:09:50.600 try to do, you know, to regain the trust of 0:09:50.760 --> 0:09:53.360 the bank over the next couple of months. But is 0:09:53.400 --> 0:09:57.000 it more important to regain the trust of shareholders or 0:09:57.360 --> 0:10:01.960 or clients? It is look client, I told you last time. 0:10:02.000 --> 0:10:05.160 Clients is I would say, one of the best experience, 0:10:05.360 --> 0:10:08.679 even in this very difficult months last year. I mean, 0:10:08.679 --> 0:10:12.600 they are so supportive of us, they are listening to us, 0:10:12.800 --> 0:10:15.680 they're doing active things to support They like to bank 0:10:15.800 --> 0:10:18.960 with credit. Switz is a fantastic experience. But you know, 0:10:19.040 --> 0:10:21.560 the convincing of this is the right thing to do. 0:10:21.720 --> 0:10:24.040 The executing at pace and the head of plan is 0:10:24.040 --> 0:10:27.120 with all different stakeholders, all different months. That's Credit Suite 0:10:27.200 --> 0:10:32.080 CEO all recorders speaking with Bloomberg's Francine Laqui on Monday. Now, 0:10:32.120 --> 0:10:35.000 as we all know, things got worse from there. Up next, 0:10:35.280 --> 0:10:37.640 we'll hear more from the chair of the Saudi National 0:10:37.679 --> 0:10:40.680 Bank and its concerns about the financial health of Credit Suites. 0:10:41.120 --> 0:10:44.080 You're listening to a special edition of Bloomberg Daybreak Weekend. 0:10:44.120 --> 0:10:47.000 I'll look back at an historic week in the markets 0:10:47.040 --> 0:10:50.800 and crisis in the banking sector. This program was recorded 0:10:50.800 --> 0:10:53.480 on Friday. If you're looking for the latest developments on 0:10:53.520 --> 0:10:55.640 this story, make sure to stay tuned to our news 0:10:55.720 --> 0:10:59.240 updates twice an hour all weekend long on Bloomberg Radio. 0:11:09.640 --> 0:11:13.080 This is Bloomberg Daybreak Weekend. I'm Tom Busby. This week 0:11:13.120 --> 0:11:15.840 a special edition of the show. It's been in historic 0:11:15.920 --> 0:11:19.760 week in financial markets, marked by crisis in the banking industry. 0:11:20.040 --> 0:11:22.800 The meltdown of Silicon Valley Bank spread across the sector, 0:11:22.880 --> 0:11:27.240 touching Signature Bank, First Republic and eventually Credit Suis. It's 0:11:27.240 --> 0:11:29.560 a story they've played out right here on Bloomberg in 0:11:29.640 --> 0:11:33.160 exclusive interviews that moved shares of Credit Suits throughout the week. 0:11:33.480 --> 0:11:36.040 On this show, we usually look forward, but today we're 0:11:36.040 --> 0:11:38.880 looking back, covering the timeline of events that got us 0:11:38.960 --> 0:11:42.079 to where we are right now. Full disclosure, we're taping 0:11:42.080 --> 0:11:44.880 this program on Friday, so it's decidedly a look back, 0:11:45.360 --> 0:11:47.720 not a view of what's to come. But stay tuned 0:11:47.760 --> 0:11:50.240 to our news updates every thirty minutes throughout the weekend 0:11:50.400 --> 0:11:53.760 for the latest developments. On Wednesday, at top shareholder ruled 0:11:53.800 --> 0:11:57.080 out adding to its stake in Credit Suite, deepening the 0:11:57.160 --> 0:12:00.319 crisis at the Swiss bank and leaving its leaders uggling 0:12:00.320 --> 0:12:02.720 to shore up confidence in mid market chaos that spread 0:12:02.760 --> 0:12:06.080 from Europe to the US. The chairman of Saudi National Bank, 0:12:06.120 --> 0:12:09.680 which became Credit Sweet's biggest shareholder late last year, said 0:12:09.720 --> 0:12:12.679 that the bank would not boost its share in the 0:12:12.760 --> 0:12:15.400 lender past the current level of just under ten percent. 0:12:15.920 --> 0:12:19.760 Amar El Kudari spoke exclusively to Bloomberg's use of Kamal 0:12:19.920 --> 0:12:22.839 l Dean in terms of your expectations for the FED, 0:12:23.360 --> 0:12:27.400 You've seen what happened with SVB and the sort of 0:12:27.440 --> 0:12:29.920 the fallout from that. You think the FED is done 0:12:29.920 --> 0:12:31.559 for the year. Or you think they're going to continue 0:12:31.559 --> 0:12:36.760 to high altitly, that's gonna channel back into the Saudi 0:12:36.800 --> 0:12:39.800 obsolute obsolute. It's a little bit top off my pay grade. 0:12:39.800 --> 0:12:44.320 But if my personal opinion is they're not dumb, the 0:12:44.320 --> 0:12:48.199 the inflation situation is proving to be more sticky than 0:12:48.480 --> 0:12:51.679 than they had originally hoped for, and they're gonna have 0:12:51.720 --> 0:12:55.640 to you know, um, they might delay it a little 0:12:55.679 --> 0:12:58.199 bit so that they make sure the ecosystem does not 0:12:58.360 --> 0:13:04.120 create another SVB, but but they will have to continue 0:13:04.160 --> 0:13:07.880 the journey to make sure to suppress inflation. We're coming 0:13:08.040 --> 0:13:10.000 off the bank of a strong set of earnings that 0:13:10.120 --> 0:13:13.920 beat expectations from animists. You kind of take that momentum 0:13:13.960 --> 0:13:16.319 into the remainder of the year. What are your expectations 0:13:16.320 --> 0:13:18.520 for credit growth? How are you going to manage the 0:13:18.559 --> 0:13:25.000 difficult rates environment globally? You know, it's unfortunate that the 0:13:25.040 --> 0:13:28.160 globe has to move to some degree in unison when 0:13:28.200 --> 0:13:31.199 it comes to interest rates, because it's money is fungible 0:13:31.280 --> 0:13:36.880 and it is an open economy. US has an inflation 0:13:36.920 --> 0:13:40.800 problem to deal with, and these increases in interest rates 0:13:42.920 --> 0:13:47.000 for sure causes a drag on your ability to grow faster. 0:13:47.520 --> 0:13:53.000 So this is a you know, high speed, high growth economy. 0:13:53.280 --> 0:13:55.920 Would we have grown faster had interest rates been two 0:13:55.920 --> 0:13:58.319 percent instead of five percent? The answer is, of course. 0:13:58.760 --> 0:14:01.880 But I think even with five or six percent intertit 0:14:02.000 --> 0:14:06.280 environment that we now see or predict will still continue 0:14:06.280 --> 0:14:10.760 to grow. There are pockets where affordability it becomes an issue. 0:14:11.520 --> 0:14:16.800 We see a decline in some of the mortgage business 0:14:16.880 --> 0:14:21.520 for obvious reasons, but in general, I think, yeah, we could. 0:14:21.960 --> 0:14:23.880 We could have done probably one or two percent more 0:14:23.920 --> 0:14:27.560 growth in the economy, saying, you know, because of higher 0:14:27.600 --> 0:14:29.800 interest rates, that drags you down, but we're still going 0:14:29.840 --> 0:14:33.080 to be seeing some great economic growth. I'm very excited 0:14:33.120 --> 0:14:34.480 about this year. I want to get to some of 0:14:34.520 --> 0:14:37.280 your big bets abroad, and let's start off with credit suites, 0:14:37.280 --> 0:14:40.800 because that went the other direction quite a bit negative 0:14:41.360 --> 0:14:44.120 over the last few weeks. A lot of questions being asked. 0:14:44.360 --> 0:14:48.600 I'm wondering whether you would be open to assisting further 0:14:49.120 --> 0:14:52.440 if there was another call for additional liquidity from credit suites. 0:14:52.600 --> 0:14:56.720 The answer is absolutely not, for many reasons outside the 0:14:56.920 --> 0:15:00.800 simplest reason, which is regulatory and statutory. We now own 0:15:01.480 --> 0:15:03.560 um nine point eight percent of the bank. If we 0:15:03.600 --> 0:15:06.800 go above ten percent, all kinds of new rules kick in, 0:15:07.080 --> 0:15:10.360 whether it be by our regulator or the European regulator 0:15:10.440 --> 0:15:13.120 or this was regulator. And we're not inclined to get 0:15:13.160 --> 0:15:16.200 into a new regulatory regime. So I can cite five 0:15:16.320 --> 0:15:19.880 six other reasons, but one reason, which is, you know, 0:15:20.120 --> 0:15:22.840 there is a glass ceiling and we do not intend 0:15:22.840 --> 0:15:26.080 to entertain going beyond it. And we're there now. I'm 0:15:26.080 --> 0:15:30.520 wondering whether any conversations have taken place about other turnaround options. 0:15:30.560 --> 0:15:34.440 Maybe some new radical ideas are needed to help revive 0:15:34.560 --> 0:15:37.360 confidence in credit suites. What are you what is your 0:15:37.360 --> 0:15:41.240 thinking there? That's uh, you're better off asking credit suite. 0:15:41.480 --> 0:15:43.920 We're you know, we don't have a board seat. We're 0:15:43.960 --> 0:15:47.240 an investor, um, and so we don't engage with them 0:15:47.280 --> 0:15:51.840 and discussions that um, you know that kind of cross 0:15:51.840 --> 0:15:56.200 fences us. UM. So the franchise credit Suites First Boston, 0:15:56.240 --> 0:15:59.320 that's also not an option, not not something you would 0:15:59.360 --> 0:16:02.080 invest We're looking at it Forday, Yeah, no, we're not 0:16:02.120 --> 0:16:05.480 looking at that. Saudi National Bank chairman Amar El Kaderi, 0:16:05.560 --> 0:16:09.520 speaking exclusively to Bloomberg on Wednesday, those remarks helping spark 0:16:09.600 --> 0:16:12.680 the biggest ever slump in Credit Sueices stock on Wednesday, 0:16:12.880 --> 0:16:15.480 prompting the Swiss authorities to issue a show of support 0:16:15.840 --> 0:16:19.160 and a credit line of up to fifty four billion dollars. 0:16:19.600 --> 0:16:22.320 After becoming engulfed in the turbulence set off by Silicon 0:16:22.400 --> 0:16:25.600 Valley banks collapse, Credit Sueices stock embarked on its initial 0:16:25.640 --> 0:16:29.240 plunge just as the European Central Banks Governing Council convened 0:16:29.280 --> 0:16:32.200 for its two day gathering, raising concerns about the health 0:16:32.280 --> 0:16:35.920 of the wider banking industry. Asked whether the latest uproar 0:16:35.960 --> 0:16:39.080 could bring a repeat of the last global financial crisis, 0:16:39.320 --> 0:16:42.520 ECB president Christine Lagarde said, I was a run in 0:16:42.560 --> 0:16:44.880 two thousand and eight, so I'll have clear recollection of 0:16:45.000 --> 0:16:49.280 what happened and what we had to do. We did 0:16:49.360 --> 0:16:54.160 reform the framework, we did agree on Buzzle three. We 0:16:54.240 --> 0:16:58.720 did increase the capital ratio, we did increase the financial 0:16:58.800 --> 0:17:01.240 coverage ratio as well, and I think that the banking 0:17:01.280 --> 0:17:04.600 sector is currently in a much much stronger position than 0:17:04.640 --> 0:17:07.280 where it was back in two thousand and eight. Despite 0:17:07.280 --> 0:17:10.119 the market turmoil, the ECB went ahead with a planned 0:17:10.200 --> 0:17:14.080 half point increase in interest rates, but offered few clues 0:17:14.160 --> 0:17:17.080 on what may follow a mid market turmoil that royaled 0:17:17.240 --> 0:17:20.399 credit suites. For more on the ECB's decision and the 0:17:20.480 --> 0:17:24.320 challenges it's facing. Former ECB Chief economist Peter Prett joined 0:17:24.320 --> 0:17:27.840 Bloomberg's Guy Johnson and Alex Steele. But so difficult is 0:17:27.840 --> 0:17:29.960 that you have the liquidity issue of solving the issue, 0:17:30.160 --> 0:17:32.480 and then the confidence issue. And in many ways it 0:17:32.480 --> 0:17:34.360 feels like what's happening in the financial system that they're 0:17:34.400 --> 0:17:35.959 here in the US or in Europe is very much 0:17:35.960 --> 0:17:40.120 a confidence issue. Hadn't the ECB deal with that? Well, 0:17:40.560 --> 0:17:43.600 that's that's a little bit their job, ECB and also 0:17:44.000 --> 0:17:47.359 as a supervisor. I think what we have today is 0:17:47.600 --> 0:17:50.159 big concerns about the in the markets belt you know, 0:17:50.200 --> 0:17:53.840 who took positions you know, in interest rate risk. So 0:17:53.880 --> 0:17:57.159 they look at the portfolio of bonds you know, in 0:17:57.200 --> 0:18:00.440 banks or is it funding funded in all the From 0:18:00.480 --> 0:18:03.720 what we know from from European banks is that the 0:18:03.880 --> 0:18:08.040 risk of you know, interest rate positions is relatively small. 0:18:08.119 --> 0:18:10.800 And this was repeated by the Ghindows, the vice president 0:18:10.840 --> 0:18:14.119 today And I'm not so much concerned, you know about 0:18:15.320 --> 0:18:17.639 interest rate risk in the banking book of the banks, 0:18:17.720 --> 0:18:19.760 you know. I also think you know that most banks 0:18:19.760 --> 0:18:23.240 are hedged, and the counterparties of the hedges are basically 0:18:23.280 --> 0:18:26.520 pension funds and insurance companies. So I think this risk 0:18:26.640 --> 0:18:29.520 is relatively under control. You never know, of course, but 0:18:29.560 --> 0:18:32.120 I think it's not the main issue. The main issue 0:18:32.560 --> 0:18:35.520 is a credit book for the tending that credit book 0:18:35.520 --> 0:18:39.280 looks good, but banks get into trouble when the credit book, 0:18:39.280 --> 0:18:41.679 you know, start to deteriorate, and I think this is 0:18:41.720 --> 0:18:43.960 the risk we have to monitor in the future. It's 0:18:43.960 --> 0:18:46.440 not so much the interest rate risk, but it's really 0:18:46.440 --> 0:18:48.399 what happens in the credit book, and for that the 0:18:48.440 --> 0:18:51.760 economy is absolutely key. For a central bank to provide 0:18:51.800 --> 0:18:54.639 liquidity when you have good collateral is not an issue. 0:18:54.760 --> 0:18:57.600 And basically that's the signal that the Swiss Central Bank 0:18:57.720 --> 0:19:02.080 is is giving, basically saying, okay, I'm ready to provide 0:19:02.080 --> 0:19:04.760 a lot of collaptional of liquidity because you have good 0:19:04.760 --> 0:19:07.960 collapsual So I think that's not the main issue for 0:19:08.000 --> 0:19:10.600 the time being. I know that the markets are concerned. 0:19:10.840 --> 0:19:13.360 Markets have still the trauma of two thousand and eight, 0:19:13.760 --> 0:19:16.720 but we live in a very different world today. I 0:19:16.760 --> 0:19:19.320 was in two thousand in the eleven in the ECB 0:19:19.720 --> 0:19:22.679 when we had, you know, the sovereign debt crisis, and 0:19:22.760 --> 0:19:26.320 the information we got, you know, from the banking system 0:19:26.480 --> 0:19:29.560 was absolutely scattered, you know, because supervision was still at 0:19:29.560 --> 0:19:33.560 the national level. Now we have concentrated information, and so 0:19:33.600 --> 0:19:36.280 that's a very big, very big difference, you know, compared 0:19:36.320 --> 0:19:39.080 to two thousand and eight. They knew what's going on. 0:19:39.440 --> 0:19:42.920 That's former ECB Chief Economist Peter Prett coming up from 0:19:42.960 --> 0:19:46.520 Europe to Washington. We hear from top lawmakers on congressional 0:19:46.520 --> 0:19:49.800 banking committees. You're listening to a special edition of Bloomberg 0:19:49.880 --> 0:19:52.639 day Break Weekend. It's a look back at the historic 0:19:52.720 --> 0:19:55.560 week in the markets and crisis in the banking sector. 0:19:55.920 --> 0:19:58.520 This program was recorded on Friday. If you're looking for 0:19:58.560 --> 0:20:01.280 the latest developments on this story, make sure to stay 0:20:01.280 --> 0:20:03.880 tuned to our news updates twice an hour all weekend 0:20:03.920 --> 0:20:18.080 long on Bloomberg Radio. This is Bloomberg Daybreak Weekend. I'm 0:20:18.119 --> 0:20:20.800 Tom Busby. This week a special edition of the show. 0:20:21.160 --> 0:20:24.040 It's been an historic week in financial markets, marked by 0:20:24.080 --> 0:20:27.800 crisis in the banking industry. The meltdown of Silicon Valley 0:20:27.800 --> 0:20:31.480 Bank spread across the sector, touching signature bank, First Republic 0:20:31.520 --> 0:20:34.680 and eventually credit suis It's a story that played out 0:20:34.760 --> 0:20:37.960 right here on Bloomberg in exclusive interviews that move shares 0:20:38.000 --> 0:20:40.679 of credit suits throughout the week. On this show, we 0:20:40.840 --> 0:20:44.199 usually look forward, but today we're looking back, covering the 0:20:44.200 --> 0:20:46.360 timeline of events that got us to where we are 0:20:46.440 --> 0:20:49.480 right now. Full disclosure, we're taping this program on Friday, 0:20:49.640 --> 0:20:52.560 so it's decidedly a look back, not a view of 0:20:52.560 --> 0:20:55.159 what's to come. But stay tuned to our news updates 0:20:55.160 --> 0:20:58.240 every thirty minutes throughout the weekend for the latest developments. 0:20:58.960 --> 0:21:02.199 On Monday, President Biden came out before the markets opened 0:21:02.400 --> 0:21:06.080 to try to calm a worried nation. All customers who 0:21:06.080 --> 0:21:08.760 had deposits in these banks can rest assured. I want 0:21:08.760 --> 0:21:12.120 to rest assured they'll be protected and they'll have access 0:21:12.160 --> 0:21:16.400 to their money as of today, that includes small businesses 0:21:16.440 --> 0:21:19.760 across the country that bank there and need to make payroll, 0:21:20.160 --> 0:21:23.040 pay their bills, and stay open for business. The President 0:21:23.119 --> 0:21:25.760 adding that he's going to ask Congress and regulators to 0:21:25.800 --> 0:21:30.359 strengthen the rules for banks. On Thursday, Treasury Secretary Janet 0:21:30.400 --> 0:21:33.240 Yellen said that her department is monitoring for a potential 0:21:33.280 --> 0:21:36.639 contraction in credit in the US following the collapse of 0:21:36.640 --> 0:21:40.680