1
00:00:03,520 --> 00:00:06,119
Speaker 1: This is Bloomberg Daybreak cuit for this Monday, the twentieth

2
00:00:06,160 --> 00:00:09,400
Speaker 1: of March in London. Coming up today, Credit to Ubs,

3
00:00:09,480 --> 00:00:12,840
Speaker 1: Swiss government broker is a historic takeover deal to end

4
00:00:12,880 --> 00:00:16,919
Speaker 1: a crisis of confidence. Three point three billion dollars troubled

5
00:00:17,000 --> 00:00:19,960
Speaker 1: lender Credit Sweez is sold to rival for less than

6
00:00:20,040 --> 00:00:24,400
Speaker 1: half It's Friday closing price. Coco's Better Aftertaste, wipeout of

7
00:00:24,480 --> 00:00:27,200
Speaker 1: risky credit Sweez Buns of ends a two hundred and

8
00:00:27,240 --> 00:00:30,960
Speaker 1: seventy five billion dollar Marcos plus taking the strain. The

9
00:00:31,040 --> 00:00:33,960
Speaker 1: FED leads a move by global central banks to boost

10
00:00:34,120 --> 00:00:41,040
Speaker 1: dollar funding. That's all straight ahead on Bloomberg Daybreak Europe.

11
00:00:41,200 --> 00:00:43,440
Speaker 1: The Business news You need to start your day in

12
00:00:43,479 --> 00:00:47,760
Speaker 1: just one fifteen minute podcast on Apple, Spotify, the Bloomberg

13
00:00:47,880 --> 00:00:55,160
Speaker 1: Business App and everywhere you get your podcasts. Good morning.

14
00:00:55,200 --> 00:00:57,800
Speaker 1: I'm Stephen Carroll and I'm Caroline Hedger. Here are the

15
00:00:57,880 --> 00:01:01,400
Speaker 1: stories that we're following today. Has agreed to buy Credit

16
00:01:01,400 --> 00:01:04,720
Speaker 1: Swee and a historic three point three billion dollars deal.

17
00:01:05,080 --> 00:01:07,280
Speaker 1: It's hope the government back to tie up will contain

18
00:01:07,319 --> 00:01:10,800
Speaker 1: a crisis of confidence that started to spread across global

19
00:01:10,880 --> 00:01:14,400
Speaker 1: financial markets. Speaking on an analyst call held by UBS

20
00:01:14,480 --> 00:01:18,200
Speaker 1: chairman Column Kelliher sought to smooth concerns about the takeover.

21
00:01:18,480 --> 00:01:21,360
Speaker 1: It's a historic day in Switzerland and a day frankly

22
00:01:21,480 --> 00:01:24,360
Speaker 1: we hoped would not come. I would like to make

23
00:01:24,360 --> 00:01:27,760
Speaker 1: it clear that while we could not initiate discussions, we

24
00:01:27,880 --> 00:01:32,160
Speaker 1: believe that this transaction is financially attractive for UBS shareholders,

25
00:01:32,240 --> 00:01:36,520
Speaker 1: protects UBS from additional downside and should support earning his

26
00:01:36,680 --> 00:01:40,480
Speaker 1: growth over time. That's UBS chairman Column Callaher speaking to

27
00:01:40,480 --> 00:01:43,240
Speaker 1: analysts after the tying up the all stock deal. The

28
00:01:43,400 --> 00:01:46,080
Speaker 1: Swiss National Bank is offering one hundred billion francs of

29
00:01:46,080 --> 00:01:49,840
Speaker 1: liquidity assistance to UBS, while the government is granting a

30
00:01:49,960 --> 00:01:54,560
Speaker 1: nine billion frank guarantee for potential losses. Even before the takeover,

31
00:01:54,600 --> 00:01:58,120
Speaker 1: Credit sweets walls in the process of cutting nine thousand jobs. However,

32
00:01:58,160 --> 00:02:01,840
Speaker 1: the merger creates significant overlaps, and at the end of

33
00:02:02,000 --> 00:02:04,720
Speaker 1: last year, the two lenders employed almost one hundred and

34
00:02:04,760 --> 00:02:09,320
Speaker 1: twenty five thousand people. Alien's chief economist, the Economic Advisor

35
00:02:09,320 --> 00:02:12,640
Speaker 1: and Bloomberg opinion columnist Mhammad l Arian says that the

36
00:02:12,760 --> 00:02:16,160
Speaker 1: rushed deal was the only viable option. This was not

37
00:02:16,200 --> 00:02:18,839
Speaker 1: the best solution, but it dominated the other two which

38
00:02:18,919 --> 00:02:22,120
Speaker 1: was either nationalization or trying to wind down the bank.

39
00:02:22,200 --> 00:02:25,720
Speaker 1: But it's full of contradictions. It's a private sector solution,

40
00:02:25,760 --> 00:02:28,760
Speaker 1: but as a government intervention, you know it's not clean.

41
00:02:29,280 --> 00:02:32,240
Speaker 1: But of the available options, this was the best one

42
00:02:32,280 --> 00:02:36,280
Speaker 1: that they could have had. Alarian spoke to Bloomberg as

43
00:02:36,360 --> 00:02:38,880
Speaker 1: Ubs said that it's too soon to know how many

44
00:02:38,960 --> 00:02:42,000
Speaker 1: jobs will go, but indicated that it will be significant.

45
00:02:42,240 --> 00:02:45,160
Speaker 1: The takeover looks to address Clyde outflows and a massive

46
00:02:45,240 --> 00:02:48,240
Speaker 1: route in credit sweezes, stock and bombs over the past week.

47
00:02:48,560 --> 00:02:51,240
Speaker 1: The fourth sale means that seventeen billion dollars of credit

48
00:02:51,280 --> 00:02:55,160
Speaker 1: sweezes riskiest bonds are now worthless. The Swiss financial regulator

49
00:02:55,200 --> 00:02:57,680
Speaker 1: says the deal triggers a complete write down of the

50
00:02:57,720 --> 00:03:01,440
Speaker 1: bank's additional Tier one bonds in order to increase core capital.

51
00:03:01,800 --> 00:03:04,360
Speaker 1: Analystsphere the move could send the entire two hundred and

52
00:03:04,360 --> 00:03:08,000
Speaker 1: seventy five billion dollar market for bank funding into a tailspin.

53
00:03:08,520 --> 00:03:12,160
Speaker 1: For PGIM Fixed Income Managing director Gregory Peters that the

54
00:03:12,200 --> 00:03:16,000
Speaker 1: whole market needs repricing. They definitely have to be repriced

55
00:03:16,000 --> 00:03:18,320
Speaker 1: for the issue that we've always had that that market

56
00:03:18,480 --> 00:03:22,000
Speaker 1: is that it's really hard to value, so we thought

57
00:03:22,000 --> 00:03:27,120
Speaker 1: it was mispriced too much equity risk relative to what

58
00:03:27,240 --> 00:03:31,840
Speaker 1: you're actually getting paid in terms of coupon and yield.

59
00:03:32,160 --> 00:03:35,600
Speaker 1: So I think first order is that those yields have

60
00:03:35,760 --> 00:03:39,280
Speaker 1: to go higher, those prices have to go lower as

61
00:03:39,480 --> 00:03:43,640
Speaker 1: that equity option totally gets restruck, and I think that

62
00:03:43,760 --> 00:03:48,119
Speaker 1: changes the whole dynamics. Eighty one bonds were introduced after

63
00:03:48,120 --> 00:03:51,440
Speaker 1: the global financial crisis to service shock absorbers when banks

64
00:03:51,520 --> 00:03:53,960
Speaker 1: start to fail. However, those who hold them say it's

65
00:03:54,000 --> 00:03:57,560
Speaker 1: shareholders that should be taking the biggest hit. Meanwhile, the

66
00:03:57,640 --> 00:04:00,560
Speaker 1: Federal Reserve and five are the Central Bank will boost

67
00:04:00,640 --> 00:04:05,480
Speaker 1: liquidity in their standing US dollar swap arrangements. Bloomberg's Value

68
00:04:05,480 --> 00:04:09,040
Speaker 1: Titel has more. This is the latest effort by policymakers

69
00:04:09,080 --> 00:04:12,600
Speaker 1: to preempt any dollar funding strains in the global financial system.

70
00:04:13,200 --> 00:04:16,120
Speaker 1: Central banks will boost the frequency of seven day maturity

71
00:04:16,160 --> 00:04:20,200
Speaker 1: operations from weekly to daily, adding to available dollar liquidity.

72
00:04:20,279 --> 00:04:22,960
Speaker 1: The move was announced in a coordinated statement by the FED,

73
00:04:23,120 --> 00:04:25,800
Speaker 1: the Bank of Canada, the Bank of England, the Bank

74
00:04:25,839 --> 00:04:28,680
Speaker 1: of Japan, and the European Central Bank and the Swiss

75
00:04:28,760 --> 00:04:32,200
Speaker 1: National Bank. The US Central Bank has typically provided access

76
00:04:32,240 --> 00:04:34,840
Speaker 1: to such arrangements at times when they're to squeeze and

77
00:04:34,839 --> 00:04:38,360
Speaker 1: the availability of dollars. Overnight, the Bank of Japan receives

78
00:04:38,400 --> 00:04:41,440
Speaker 1: zero bids for their dollar funding operation in London. On

79
00:04:41,600 --> 00:04:45,640
Speaker 1: Valerie Titel Bloomberg Daybreak Europe. Now, the Swiss tie up

80
00:04:45,760 --> 00:04:49,440
Speaker 1: caps the past fortnight of global banking meltdowns. First, in

81
00:04:49,480 --> 00:04:52,320
Speaker 1: the US, crypto friendly banks silver Gate said it would shutter.

82
00:04:52,360 --> 00:04:55,599
Speaker 1: Then the startup focused Silicon Valley Bank failed after venture

83
00:04:55,600 --> 00:04:58,760
Speaker 1: capital investors urged founders to pull their money from the

84
00:04:58,760 --> 00:05:02,520
Speaker 1: Californian lender, causing the second biggest bank failure in US history.

85
00:05:02,800 --> 00:05:05,520
Speaker 1: Signature Bank in New York was also seized by regulators,

86
00:05:05,680 --> 00:05:09,040
Speaker 1: and last Thursday, the largest US banks, including JP Morgan,

87
00:05:09,120 --> 00:05:12,240
Speaker 1: Bank of America, and Wells Fargo, propped up First Republic

88
00:05:12,480 --> 00:05:16,680
Speaker 1: with a thirty billion dollar lifeline. Bain Capital senior advisor

89
00:05:16,760 --> 00:05:19,680
Speaker 1: Steve Pagliukia says, we're dealing with a different crisis to

90
00:05:19,800 --> 00:05:22,520
Speaker 1: two thousand and eight. Well, we've had a recognition that

91
00:05:22,560 --> 00:05:26,720
Speaker 1: the inverted yield curve has hampered in the balance sheet

92
00:05:27,480 --> 00:05:32,040
Speaker 1: on a paper basis of some niche banks. And when

93
00:05:32,080 --> 00:05:34,479
Speaker 1: the first crisis happened in two thousand and eight and

94
00:05:34,520 --> 00:05:36,520
Speaker 1: the whole issue was systemic collapse. We don't have a

95
00:05:36,520 --> 00:05:39,320
Speaker 1: systemic collapse. Now, we have a crisis of confidence, and

96
00:05:39,400 --> 00:05:42,479
Speaker 1: that crisis of confidence can ratchet into a bad economy.

97
00:05:43,279 --> 00:05:46,240
Speaker 1: But Bagleyoka added, this wave of contagion has so far

98
00:05:46,400 --> 00:05:50,559
Speaker 1: only hit risky, poorly managed banks. Those are top stories

99
00:05:50,600 --> 00:05:53,400
Speaker 1: this morning. Okay, so you've got about ten thousand people

100
00:05:53,440 --> 00:05:56,799
Speaker 1: here in London. The employee, he's at Credit Suite and ubs.

101
00:05:56,839 --> 00:05:59,320
Speaker 1: You're going to be waking up extremely anxious, of course,

102
00:05:59,800 --> 00:06:02,159
Speaker 1: after this deal and this tire. But I just want

103
00:06:02,240 --> 00:06:04,720
Speaker 1: to kind of think about the week. It has been

104
00:06:04,720 --> 00:06:08,120
Speaker 1: incredibly it's been extraordinary. Basically, you think back a week

105
00:06:08,160 --> 00:06:12,280
Speaker 1: a last Monday, Francy Lakaua was getting ready to interview

106
00:06:12,320 --> 00:06:14,440
Speaker 1: the CEO of Credit Sweete ol Rik Kernel, who actually

107
00:06:14,720 --> 00:06:17,920
Speaker 1: was in London, was speaking to her then on Tuesday. Now,

108
00:06:17,920 --> 00:06:20,360
Speaker 1: the thing that got most people's attention a week ago

109
00:06:20,480 --> 00:06:22,320
Speaker 1: was the fact that he talked about their having been

110
00:06:22,440 --> 00:06:25,599
Speaker 1: client inflows on Monday, and there was sort of a

111
00:06:25,640 --> 00:06:28,560
Speaker 1: bit of a red flag. There is the CEO watching

112
00:06:28,640 --> 00:06:31,920
Speaker 1: inflows day by day. That's a little bit worried. By Wednesday,

113
00:06:32,040 --> 00:06:35,880
Speaker 1: it has already been a pretty worldwide biggest shareholders had

114
00:06:36,600 --> 00:06:39,720
Speaker 1: ruled out providing more financial assistance. That This was the

115
00:06:39,880 --> 00:06:43,320
Speaker 1: Saudi National Bank also speaking to Bloomberg saying no, their

116
00:06:43,320 --> 00:06:45,880
Speaker 1: limit was just under ten percent of ownership of Credit Sweets,

117
00:06:45,880 --> 00:06:48,760
Speaker 1: they wouldn't do anymore. That also got huge attention. By

118
00:06:48,800 --> 00:06:51,400
Speaker 1: the end of the day, Credit Sweezes share prices plunged

119
00:06:51,480 --> 00:06:55,520
Speaker 1: twenty four percent. Dollar denominated bonds had been hit really badly,

120
00:06:55,560 --> 00:06:58,080
Speaker 1: so already by Wednesday there was discussion about what was

121
00:06:58,080 --> 00:06:59,960
Speaker 1: going to happen to Credit Suee, and this what huge

122
00:07:00,040 --> 00:07:02,880
Speaker 1: pressure on the central Bank in Switzerland to do something

123
00:07:02,960 --> 00:07:05,120
Speaker 1: and on the Swiss government as well, because you know,

124
00:07:05,120 --> 00:07:07,680
Speaker 1: we have to remember, while this is a globally systemic

125
00:07:07,720 --> 00:07:10,040
Speaker 1: bank as we're talking about, it's also a major retail

126
00:07:10,080 --> 00:07:12,600
Speaker 1: bank in Switzerland. So those they're facing two dilemmas on

127
00:07:12,640 --> 00:07:14,720
Speaker 1: that front. We had the Swiss National Bank then step

128
00:07:14,760 --> 00:07:18,440
Speaker 1: in on Thursday with that fifty billion franc liquidity lifeline.

129
00:07:18,600 --> 00:07:20,480
Speaker 1: Was meant to be enough to cam those fear as

130
00:07:20,520 --> 00:07:24,560
Speaker 1: it was their big bazooka, and it didn't go far enough, no, absolutely,

131
00:07:24,640 --> 00:07:26,760
Speaker 1: but of course only got a layer in there the

132
00:07:26,760 --> 00:07:29,119
Speaker 1: fact that the ECB rate hike went ahead at fifty

133
00:07:29,120 --> 00:07:31,360
Speaker 1: basis was and that is the backdrop to all of this,

134
00:07:31,400 --> 00:07:33,800
Speaker 1: isn't it. It's that rising interest rates are kind of

135
00:07:34,120 --> 00:07:38,080
Speaker 1: putting banks at the forefront, squeezing them over the weekend.

136
00:07:38,520 --> 00:07:42,440
Speaker 1: Very unusual to see a bond traders actually working over

137
00:07:42,440 --> 00:07:44,960
Speaker 1: the weekend. Goldman, Sachs, morm Gon Sally were among the

138
00:07:44,960 --> 00:07:49,120
Speaker 1: bondesks that were open over the weekend according to our reporting.

139
00:07:49,440 --> 00:07:51,600
Speaker 1: And then by Sunday, of course you had that deal. Yeah.

140
00:07:51,640 --> 00:07:54,200
Speaker 1: I mean six days from client inflows to the essential

141
00:07:54,360 --> 00:07:57,480
Speaker 1: end of Credit suisses is how short that timeline was.

142
00:07:57,880 --> 00:08:01,680
Speaker 1: Look the press conference was really interesting to watch, partly

143
00:08:01,720 --> 00:08:04,040
Speaker 1: because of all of the players being lined up together,

144
00:08:04,080 --> 00:08:07,040
Speaker 1: the Credit Swiss, the UBS, but also the Swiss finance

145
00:08:07,120 --> 00:08:09,200
Speaker 1: Minister that Thomas Jordan, the head of the Swiss National

146
00:08:09,280 --> 00:08:11,280
Speaker 1: Bank as well, and the head of FINMA, the Swiss

147
00:08:11,480 --> 00:08:16,400
Speaker 1: financial regulator as well. Everyone was trying to project this

148
00:08:16,560 --> 00:08:19,360
Speaker 1: unified image that you know, it had been a deal

149
00:08:19,480 --> 00:08:22,320
Speaker 1: agreed to move on from this, that UBS would step

150
00:08:22,400 --> 00:08:24,920
Speaker 1: in to take over. Of course, lots of difficult questions

151
00:08:24,920 --> 00:08:27,560
Speaker 1: being asked, particularly Francy Locke's question about those eighty one

152
00:08:27,600 --> 00:08:30,600
Speaker 1: bonds and why those were the bondholders that are losing

153
00:08:30,640 --> 00:08:33,080
Speaker 1: out versus the shareholders. That's one of the big questions

154
00:08:33,080 --> 00:08:36,679
Speaker 1: we're unpicking today. There was one moment of levity though,

155
00:08:36,679 --> 00:08:39,400
Speaker 1: where I didn't know that the Swiss Finance Minister pointed

156
00:08:39,440 --> 00:08:43,000
Speaker 1: out that she had her current account, savings account and

157
00:08:43,080 --> 00:08:45,160
Speaker 1: mortgage with Credit Swiss and that she was a local

158
00:08:45,200 --> 00:08:48,360
Speaker 1: Credit Swiss customer, but like every Swiss person, also had

159
00:08:48,400 --> 00:08:50,640
Speaker 1: an account at UBS. Oh okay, all right, so she

160
00:08:50,720 --> 00:08:53,560
Speaker 1: was trying to play for all right. Interesting, let's unpack

161
00:08:53,679 --> 00:08:56,880
Speaker 1: what all of this means now for this Monday morning,

162
00:08:57,000 --> 00:08:59,680
Speaker 1: UBS is taking over Credit Suite with billions in Swiss

163
00:08:59,800 --> 00:09:03,160
Speaker 1: NA bank and state support. Joining us now is Tim Craighead,

164
00:09:03,360 --> 00:09:07,480
Speaker 1: Senior European strategist, director of research for Bloomberg Intelligence. Tim,

165
00:09:07,600 --> 00:09:10,199
Speaker 1: very good to have you with us. After a whirlwind weekend,

166
00:09:10,559 --> 00:09:14,679
Speaker 1: bank stocks and features have now reversed earlier gains this morning.

167
00:09:14,720 --> 00:09:20,920
Speaker 1: They're turning lower now. Markets are looking quite nervous, indeed,

168
00:09:21,400 --> 00:09:23,560
Speaker 1: And thanks for having me on this morning and having

169
00:09:23,559 --> 00:09:29,480
Speaker 1: indeed be crazy weekend. Look, I think this struggle that

170
00:09:29,520 --> 00:09:34,160
Speaker 1: we've had over the course of the path month or so,

171
00:09:34,640 --> 00:09:40,080
Speaker 1: you know, forget the path and Ish days is likely

172
00:09:40,120 --> 00:09:42,760
Speaker 1: to continue for a while, and that that tug of

173
00:09:42,920 --> 00:09:44,640
Speaker 1: war that we're in the middle of it we've been

174
00:09:44,640 --> 00:09:50,840
Speaker 1: talking about a good bit is going back to fundamentals,

175
00:09:50,920 --> 00:09:56,840
Speaker 1: and this bank situation just helps exacerbate those underlying issues.

176
00:09:56,840 --> 00:09:58,720
Speaker 1: And what do I mean by that? In a nutshell,

177
00:09:59,559 --> 00:10:03,760
Speaker 1: you've got evaluation that's been whipp solved by central bank

178
00:10:04,200 --> 00:10:10,439
Speaker 1: policy movements and expectations of movements. If you look at

179
00:10:10,520 --> 00:10:17,120
Speaker 1: the markets expected view of whether it's the Fed funds

180
00:10:17,200 --> 00:10:21,199
Speaker 1: rate or it's the European policy rate, they had continued

181
00:10:21,240 --> 00:10:24,440
Speaker 1: to rise until about a week and a half ago,

182
00:10:24,600 --> 00:10:27,240
Speaker 1: and now they've collapsed back to where they started at

183
00:10:27,240 --> 00:10:31,559
Speaker 1: the beginning of the year. Earnings expectations across the broad

184
00:10:31,679 --> 00:10:38,240
Speaker 1: market and banks specifically have been generally on a downtrend

185
00:10:38,400 --> 00:10:42,240
Speaker 1: for the last quarter and then reversed over the course

186
00:10:42,320 --> 00:10:47,160
Speaker 1: the past few weeks. All of this creates tension in

187
00:10:47,160 --> 00:10:52,000
Speaker 1: the marketplace, and I think, frankly, the banking situation I'm

188
00:10:52,040 --> 00:10:54,839
Speaker 1: a little bit less concerned about on the liquidity front

189
00:10:54,920 --> 00:11:02,760
Speaker 1: being a domino and more thinking about underlying fundamental drivers

190
00:11:02,760 --> 00:11:05,560
Speaker 1: of the market. And they're not calming yet and they're

191
00:11:05,600 --> 00:11:08,880
Speaker 1: likely to remain quite volatile. Over the course, so I

192
00:11:08,920 --> 00:11:12,520
Speaker 1: think the rest of the first half of this year, Tim,

193
00:11:12,600 --> 00:11:15,839
Speaker 1: what's your reading of the detail of this deal? Shareholders

194
00:11:15,880 --> 00:11:18,880
Speaker 1: looking to have fared better than the riskiest bondholders in

195
00:11:18,920 --> 00:11:23,160
Speaker 1: Credit Suite. Is this a deal that's full of contradictions? Yeah,

196
00:11:23,280 --> 00:11:29,600
Speaker 1: I mean it is intriguing. I can't say that I'm

197
00:11:29,720 --> 00:11:32,200
Speaker 1: any expert to tell you on why it was that

198
00:11:32,280 --> 00:11:37,439
Speaker 1: the ape ones got wiped out relative to the equity

199
00:11:37,559 --> 00:11:40,840
Speaker 1: being bought by UBS. I would say that if you

200
00:11:40,880 --> 00:11:45,400
Speaker 1: look at Credit Suises stock price, which I think, if

201
00:11:45,440 --> 00:11:50,720
Speaker 1: I'm correct, peaked a couple of decades ago at about

202
00:11:50,800 --> 00:11:54,240
Speaker 1: seventy billion dollars and it ends its history at three

203
00:11:54,360 --> 00:11:57,959
Speaker 1: billion or whatever the number actually ended up being going

204
00:11:58,000 --> 00:12:05,280
Speaker 1: to shareholders, The equity shareholders didn't fare particularly well. The

205
00:12:05,520 --> 00:12:11,960
Speaker 1: at one holders varying worse certainly goes into the technical

206
00:12:12,120 --> 00:12:17,000
Speaker 1: aspects of what this class means, and certainly that's feeding

207
00:12:17,200 --> 00:12:21,400
Speaker 1: some of the concerns in the marketplace this morning, the

208
00:12:21,480 --> 00:12:26,600
Speaker 1: knee jerk reaction, for example with HSBC overnight in Hong Kong.

209
00:12:28,120 --> 00:12:32,320
Speaker 1: But I don't see at this morning, I don't see

210
00:12:32,320 --> 00:12:34,520
Speaker 1: why this is a concern that all of a sudden

211
00:12:34,600 --> 00:12:38,679
Speaker 1: that class of capital for banks is all of a

212
00:12:38,720 --> 00:12:42,800
Speaker 1: sudden out at risk. Far from it. Credit Suez is

213
00:12:42,840 --> 00:12:49,120
Speaker 1: a very unique situation, as was SVB and Signature. I'm

214
00:12:49,160 --> 00:12:50,839
Speaker 1: still in the camp with not seeing this as a

215
00:12:50,880 --> 00:12:52,800
Speaker 1: cock roach theory where all of a sudden we can

216
00:12:52,840 --> 00:12:56,160
Speaker 1: see all sorts of the liquidity issues in similar situations

217
00:12:56,160 --> 00:12:59,240
Speaker 1: where regulators have to step in and go back and say,

218
00:12:59,320 --> 00:13:02,800
Speaker 1: I think this is a lot more about expectations of

219
00:13:02,960 --> 00:13:06,360
Speaker 1: bank earnings in a very different rate environment than what

220
00:13:06,400 --> 00:13:08,400
Speaker 1: we thought a week and a half ago, and that

221
00:13:08,480 --> 00:13:14,760
Speaker 1: by extension, has ramifications for things like dividend pay payouts

222
00:13:14,800 --> 00:13:19,320
Speaker 1: and share repurchases, all of which had gotten quite constructive

223
00:13:19,360 --> 00:13:23,440
Speaker 1: for banks, and now all of that's being reset. Okay,

224
00:13:24,040 --> 00:13:27,800
Speaker 1: So lots of sort of unique circumstances. Just briefly, then,

225
00:13:27,960 --> 00:13:33,120
Speaker 1: does this mean this deal better financial stability? Now? Do

226
00:13:33,200 --> 00:13:35,240
Speaker 1: you see reminders of two thousand and eight? It sounds

227
00:13:35,240 --> 00:13:41,600
Speaker 1: like you don't, And that's correct, Caroline. I think this

228
00:13:41,679 --> 00:13:44,720
Speaker 1: is more one Often it wasn't any fun if you

229
00:13:44,800 --> 00:13:47,560
Speaker 1: go if you were in the markets back with LCTA

230
00:13:47,760 --> 00:13:50,160
Speaker 1: or back in the markets when the US statements and

231
00:13:50,200 --> 00:13:54,800
Speaker 1: loan crisis occurred, but they did pass as opposed to

232
00:13:54,840 --> 00:14:00,520
Speaker 1: the broader economic ramifications of the global financial crisis. Yea,

233
00:14:01,240 --> 00:14:04,520
Speaker 1: we do have a backdrop with significantly higher rates than

234
00:14:04,559 --> 00:14:07,480
Speaker 1: where we were six months ago, nine months ago. That

235
00:14:07,559 --> 00:14:10,960
Speaker 1: will have economic group percussions that haven't flowed through. But

236
00:14:11,080 --> 00:14:16,680
Speaker 1: that's more earnings and valuation, not a bank, right of it. Tim,

237
00:14:16,720 --> 00:14:18,800
Speaker 1: Thank you so much for being with us. Tim Craighead,

238
00:14:18,880 --> 00:14:23,760
Speaker 1: Senior European Strash's director of research at Bloomberg Intelligence. Well,

239
00:14:23,800 --> 00:14:27,080
Speaker 1: let's dig into some of those behind the scenes steps

240
00:14:27,280 --> 00:14:30,720
Speaker 1: that led us to that Sunday night press conference where

241
00:14:30,760 --> 00:14:33,640
Speaker 1: the deal was announced that UBS was taking over Credit

242
00:14:33,680 --> 00:14:36,960
Speaker 1: Swee Selene Garin's has been looking through some of the

243
00:14:37,040 --> 00:14:40,920
Speaker 1: events that happened over the weekend lean takeover of one

244
00:14:41,000 --> 00:14:44,000
Speaker 1: hundred and sixty six year old bank, bringing some relief

245
00:14:44,000 --> 00:14:46,280
Speaker 1: to traders who were worried about going into today without

246
00:14:46,320 --> 00:14:49,440
Speaker 1: a deal. Yeah. Absolutely, And we did see that, didn't

247
00:14:49,440 --> 00:14:52,560
Speaker 1: we last weekend too, As you did mention with Caroline,

248
00:14:52,600 --> 00:14:55,320
Speaker 1: this has been going on for two weekends. We saw

249
00:14:55,320 --> 00:14:59,440
Speaker 1: that with SVB, we really needed that to be sorted

250
00:14:59,440 --> 00:15:02,800
Speaker 1: out before markets opened on Monday, and then this weekend

251
00:15:02,840 --> 00:15:05,520
Speaker 1: that we've just gone through exactly the same thing happened

252
00:15:05,640 --> 00:15:10,720
Speaker 1: yesterday and traders, money managers and much of the finance

253
00:15:10,800 --> 00:15:14,840
Speaker 1: world apparently just worked so hard over the weekend. They

254
00:15:14,880 --> 00:15:17,960
Speaker 1: had six am wake up calls, They had to cancel

255
00:15:18,080 --> 00:15:22,840
Speaker 1: their tennis dates, which I would find extremely distressing, and

256
00:15:23,080 --> 00:15:27,000
Speaker 1: anxious checkups on bond prices apparently while they were walking

257
00:15:27,040 --> 00:15:32,120
Speaker 1: their dogs. So Goldman and Morgan Stania's Coraline mentioned earlier

258
00:15:32,160 --> 00:15:34,800
Speaker 1: were actually among the bond deaths that were open over

259
00:15:34,800 --> 00:15:38,160
Speaker 1: the weekend. This is something extremely rare, This is something

260
00:15:38,160 --> 00:15:40,480
Speaker 1: that we don't see, and it just really shows that

261
00:15:40,640 --> 00:15:43,920
Speaker 1: anxiety that's been going on and rippling through the markets,

262
00:15:43,960 --> 00:15:49,000
Speaker 1: and especially the confidence that people are losing in the system. So,

263
00:15:49,080 --> 00:15:53,480
Speaker 1: speaking to Bloomberg, Anthony Cohen on market security spent the

264
00:15:53,520 --> 00:15:57,800
Speaker 1: weekend on calls, he says, with very nervous clients, and

265
00:15:57,920 --> 00:16:00,840
Speaker 1: he looked through reports on Swiss banks. He did his

266
00:16:00,960 --> 00:16:04,440
Speaker 1: homework us A regional lenders. And that's a light of

267
00:16:05,040 --> 00:16:08,800
Speaker 1: SVB and clues on how the Fed might raise interest

268
00:16:08,880 --> 00:16:12,440
Speaker 1: rates this week, because remember they're still trying to damp

269
00:16:12,480 --> 00:16:15,400
Speaker 1: an inflation in lots of ways, and we did see

270
00:16:15,440 --> 00:16:19,440
Speaker 1: the ECB last week raise interest rates fifty basis points

271
00:16:19,440 --> 00:16:23,240
Speaker 1: so they're now looking for clues going ahead, and Ben Ritchie,

272
00:16:23,320 --> 00:16:27,160
Speaker 1: head of the European equities at Aberdeen Investment, says, there

273
00:16:27,320 --> 00:16:31,760
Speaker 1: is definitely a sense of discomfort in the markets, which

274
00:16:31,760 --> 00:16:35,200
Speaker 1: I think Tim just explained to us slightly earlier Caroline.

275
00:16:35,600 --> 00:16:38,720
Speaker 1: But on the bright side, for other traders, the turmoil

276
00:16:38,760 --> 00:16:43,160
Speaker 1: means opportunity and this is something we can't forget. Bloomberg's

277
00:16:43,200 --> 00:16:47,800
Speaker 1: Andrea Tooney, head of sales trading at Saxo Banquet, said

278
00:16:47,920 --> 00:16:52,600
Speaker 1: he relished the chance to get to work today. This

279
00:16:52,720 --> 00:16:55,720
Speaker 1: is Bloomberg Daybreak Europe. You're mourning brief on the stories

280
00:16:55,800 --> 00:16:58,880
Speaker 1: making news from London to Wall Streets and beyond. Look

281
00:16:58,880 --> 00:17:01,840
Speaker 1: for us on your podcast speed every morning on Apple,

282
00:17:01,960 --> 00:17:04,919
Speaker 1: Spotify and anywhere else you get your podcasts. You can

283
00:17:04,960 --> 00:17:07,879
Speaker 1: also listen live each morning on London Dab Radio, the

284
00:17:07,880 --> 00:17:11,399
Speaker 1: Bloomberg Business app, and Bloomberg dot Com. Our flagship New

285
00:17:11,440 --> 00:17:14,800
Speaker 1: York station is also available on your Amazon Alexa devices.

286
00:17:15,119 --> 00:17:19,320
Speaker 1: Just say Alexa play Bloomberg eleven thirty. I'm Caroline Hipka

287
00:17:19,400 --> 00:17:21,879
Speaker 1: and I'm Stephen Carroll. Join us again tomorrow morning for

288
00:17:21,960 --> 00:17:24,400
Speaker 1: all the news you need to start your day right

289
00:17:24,400 --> 00:17:33,960
Speaker 1: here on Bloomberg Daybreak Europe,