The Rise & Fall of Europe's Most Notorious Bank
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- čas přidán 30. 05. 2024
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SOURCES:
I've linked my sources in the blog that goes along with this video. Most links are in the text. But, I added some extra literature and data sources to the end of the blog: www.moneymacro.rocks/blog
Timestamps:
0:00 - introduction
1:08 - Swiss Banking
7:45 - Sponsor
9:10 - Wealth Management
13:16 - Investment Banking
17:02 - Take-Overs
19:35 - Scandals Scandals
24:03 - The Bailout
Attribution:
- UBS CZcams Channel
- Credit Suisse CZcams Channel
- Goldman Sachs CZcams Channel
- Several images were generated with Dall-E
- Video used from some films and TV shows such as Marry Poppins, Downtown Abbey, Succession, Wall Street, Selling Sunset
Neon sign from: www.neonlights.be/discount/M&M15
Narrated, Edited and produced by Dr. Joeri Schasfoort
Animations by Hugo (Into Europe)
Thumbnail by Tom Hurling studiotomkin.com/
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I used to work at Credit Suisse in 2018. I worked for the US investment bank. Our technical infrastructure was in poor shape, so we couldn't run the business adequately. The prime brokerage business was run out of a series of Excel files on a shared drive, stitched together using VBA macros. There were technical problems every day that affected our ability to work. Risk management was almost impossible because our pricing server would crash at least twice a month. Because Tidjane Thiam was more interested in banking for criminals than running a Wall Street bank, we had no funding to improve the sorry state of our technology. The Swiss side of CS basically cut the funding of the US side investment bank and had them still try and compete with Goldman and JPM. I did not stay for long and am enjoying the collapse of this bank. Some of the most incompetent management in all of banking.
Dear God that's a horrifying concept.
But why blame Todjane Thiam? Credit Suisse was banking criminals money long before he arrived at CS. He was just better at it. Blame Iqbah Kahn, the director of your division. He's the one that wanted to hang with the Looney Tunes on The Street. Figure out the funding and market before voting to establish an air pie restaurant/bakery.
Glad you got out of there. That must have been stressful.
Racist. Bet u wouldn't have said the same if tidjane was not black. He did great considering the circumstances
We need to get rid of a americants in Swiss banking
I deeply admire the clarity and precision with which you explain concepts that many economics textbooks go at great lengths to obfuscate through jargon and curious omissions. The Swiss banking secrecy laws have nothing on most of the economics profession. 😂
One might think the obfuscation is almost deliberate.
As a Swiss it makes me mad that these banks can continue to do their shady business and highly-leveraged risks and if it goes wrong, bailouts, even for the non-systemically-vital parts. "Too big to fail" did not stop the disaster in time, so I hope massive changes and restrictions will be enforced on this massive bank. If this one ever goes broke, there will not be a bigger bank to buy it up again...
Money laundering banks
Every bank in the world now is a failed bank. Paper currency has no value. That's a myth.
Marco, so you now know how the Swiss become rich without any natural resources.
SMFH.
So we all need to Vote accordingly
@@pebblepod30 There is no party that will promise they will get rid of paper currency and start using real money. Your vote doesn't mater. It will be more of the same, but different flavor.
you're the most underrated macroeconomics (& money) channel. SUPERBLY animated and the clearest explanation for all the strange things happening in the world economics nowadays
Thank you Nik. I appreciate your words of support!
Gonna get some popcorn for this video
It's funny. The more I learn about money the more I realize that it all works on just because we believe it works.
Which I suppose makes crypto-currencies all the more credible (potentially).
@@dandare1001 The number of people who actually believe that cryptocurrencies "work" (in the sense of being a replacement for hard currency, as opposed to an instrument for speculation) is extremely small, though.
@@rherydrevins Yes, you're correct. My point was that all currencies are a matter of faith, crypto or FIAT. I can easily imagine the crypto side settling down to less speculators and more users in a few years. It's possible anyway, and with an almost worldwide, growing, mistrust in governments (and often a seemingly grudging use of the US dollar), a distinct possibility.
America's fall is also inevitable. People used to believe in that faith-based dream as well.
@@dandare1001 haha, you really think crypto works any different?
One missed addition - new CEO is not “just” another banker, it is the guy who was the CEO of the UBS after bailout. Suppose similar circumstances require similar kind of people.
That's actually a really important catch wow... I do wonder what Swiss politics itself looks like.
The fact that this video still has less than 100k views is criminal. Deserves way more views cos this truly is just quality education presented in a very concise manner!
I have to join many others here in saying that this was a great video, even in comparison to your usual high quality videos. Clear, detailed, with a proper (imo) focus on the morality and not just the economics. One of my favorite channels on YT.
Money and Macro channel > Economic Explained
I also thought it interesting that during the weekend of the merger that the Swiss government suspended Swiss monopoly laws to enable the acquisition. The laws was reinstated immediately after and the resulting “behemoth” was incredibly unstable, potentially crippling Switzerland.
Excellent video…
👍👍👍
I'm not sure if the collapse of the UBS would cripple the country. The ppl here are very resilient.
@@tomo1168 it doesnt have to
The same suspension happened this week, when JP Morgan bought First Republic Bank. It's funny how they bend the rules for the right companies.
@@tomo1168 resilience won't prevent a economic crisis the same way that hard work won't guarantee good pay
@@dandare1001 let's say: for themself
I can answer the question for you. A lot of Swiss politicians are corrupt and paid out of the pockets of big companies like Nestle or UBS. After they "retire" from politics they go on to get well-paid jobs in the advisory boards. This is especially true for the people making it into he "Bundesrat". It's how Switzerland operates.
That's how every country operates unfortunately. At least yours don't end up on the boards of Gazprom.
Except for their Black CEO. Switzerland is too racist to let him benefit.
Translation - Suisse Gov and Economy is a Capitalism Success Story
I love learning about stuff like this!
Want to add regarding the "Switzerland was a poor country" myth. A quick check shows that in 1860 Switzerland was in the top three in terms of gdp per capita in Europe and only the UK had a substantially higher gdp per capita. It's true though that Switzerland was a small country and in general development in the 19th century still basic also in Europe. However because of a weak and indeed poor nobility in the late medieval times, both reformation in the 16th century and the pre-industrial developments in the 17th century kicked in early and brought relative wealth to Switzerland. Which allowed early mechanised industries and also was the base for global trade through Switzerland. The banking was important to build the infrastructure and surely contributed to wealth in Switzerland but was never a huge gdp contributer (banking was max 5% of gdp of which most retail, wealth management a fraction of it)
To add to that, an abundance of hydropower made Switzerland quite industrially relevant at the time. For example, if my memory serves me right, they used to be one of the world's main suppliers of refined aluminium. So building railroads made a lot of sense, since the industrial base was already there.
@@majorfallacy5926 interesting I wasn't aware of the aluminium part.
Even though Banking is 5% of GDP, the money supply created by it affects the GDP far more than that. Plus FDI and foreign reserves are affected by banking industry.
@Ned Diego 95% of it is our own money. The total impact on the gdp of banking is plus 30% (suppliers) . Inform yourself and get your facts straight. It's about exporting stuff.
@@davidw8668 Most money in Swiss banks are from outside. If one of your big banks go bust, exports can't save your economy 😂. Swiss banking industry will never be the same again. That's why your government allowed UBS to takeover CS. Like it or not Switzerland can't afford to lose that shady banking industry.
Watching a speaker of a germanic language (i.e. Dutch) struggle to pronounce another very germanic sounding name makes me feel better about my many butcherings of European names 💞
if you were a Bavarian you would be even happier :))) The bavarians are bitterly hating the ''gobblins'' ESPECIALLY those painted in germanic names
@@kukulroukul4698 Who's a "gobblin"? How can you paint something in a name? 🤔
If I would try to speak German I guess that I will start with the Swiss dialect first because they speak so extremely slow there... and same goes for speaking French, where the Swiss always speak their sentences so slowly that it is easy to keep up 😂
@@nattygsbord only in Bern. here in Zürich we speek quick and get straight to the stuff. efficiency over all, money has to be made :D
😂😂
It was to rescue the Swiss banking reputation. With a collapse nobody would believe anymore that their money is safe in Switzerland. And the Swiss banking system is a major part of Swiss economy.
Well they can't guarantee Uncle Sam won't come after tax cheats, so isn't it worthless already? Why not just go to another tax haven?
@@richardarriaga6271 for Americans it's worthless already, but for Asian, Middle Eastern, and other consumers it was a good spot, but 2022 changed it, and they made a bank run of their own😅😅😅
@@hhkk6155 who made a bank run of their own? The Swiss?
@@manyulgarprsch nope, clients from Asia, middle East, etc. Mostly money flowing to the UAE, Singapore, etc.
he clamed it was 3x the size of the economy?
I love this channel, not only because of the clear explanation but because it also raised the question if the decision was good for the citizens. The morality bit is missing from a lot of economics channels
The "whole-sale" rescue sounds really fishy. Interesting comparison with the case of Fortis /Amro. Is it about helping complicit but well-connected people walk away scot-free?
Great video Joeri!
"it is not bail out"
What part of not a bail out includes indemnity from possible law suits that might have arisen from acquisition of Credit Suisse assets and a 50billion CHF of government facilities
He was being sarcastic in the video.
Waiting for the first republic video you'll be uploading by june 😂❤
Hahaha damn that hits home
Amazing video, like always
So it was too big to fail and the government brokered a deal backed by billions of swiss taxpayers money. If big banks are so important to exist but cannot survive without government assistance, why doesnt't the government nationalise them? This way the government can get profits during the good times and bail the bank out during the bad ones if needed. The police and military are crucial for the government so they belong to it. Why not banks?
In many countries there is a deposit insurance fund (e.g FDIC) that banks pay into that are used for bailouts and/or repaying depositors in the event of bank failures.
The largest Chinese banks are all nationalized. Check out how that's worked.
The government does profit from the banks actually. They buy the government bonds and pay fees to the government deposit insurance and central banks. There is a disadvantage to excess profit for the government though. Whatever they charge slows down investment and activity in the private economy and having fully nationalized banks tends to cause more corruption.
When the government own the bank all assets of the government becomes liabilities of the bank.
@@stevengreidinger8295 worked out great actually!! Whats your point lol? hsbc and other Chinese banks are literally technically so advanced ( in computing and database management ) that they will certainly be the next #1 possibly in banking around the globe!
China still has problems though, their real estate business model is seriously flawed and need to be addressed. Once china starts closing some gaps in their models ( which they are working on and doing pretty well so far! ) they will surely take the world by storm!! Mark my words! 2049+ will 100% be the beginning of china’s century as #1 over all.
They still have a long way to go though, but trust me, they are EXTREMELY savvy, and capable!
Also i am aware that HSBC is headquartered in london but apple has theirs in Ireland so it doesn’t change anything. Look up the biggest banks in the world.
Another amazing vid. Thank you. It is well informing and entertaining:))))))
Really intersting stuff, as always :-)
very good video, thank you!
Great analysis as usual 👏
This is certainly a well researched, neatly narrated and well concluded post. Fortunately just stumbled upon this video to see it.
Hope to see many more like these in future.
Really good video.
Great video!
“The Belgian and the best government” when you said Dutch government 😂 Patriotism through subtitles
Haha damn you found... Eh automatic subtitles I swear
@@MoneyMacro wasn't sure if it was transcription error or Easter egg 😁
i was missing your contents...thanx
Thank you, this was very informative. I am glad the rotten Credit Suisse is no longer around but only having 1 mega banking corp in Swiss is probably not a good thing..
The only thing worse than having 1 too-big-to-fail bank, is to have two such banks.
@@nattygsbord I don't know, there is going to be a lot less competition now.
@@EatMyShortsAU Ideally should there be many small and medium size banks instead - unlike today.
And there should be transparency - unlike today.
And commercial banking and investment banking should be separated - unlike today.
And leverage should be under 20 - unlike today.
And reckless gambling on OTC-derivites should be regulated and banned.
And most of the money printing funtion in an economy should be taken over by the government.
Bankers will complain and say that I reduce their profits and make their industry less "effiecent".
And that is true. Maybe I don't want Casinos that constantly crashes and need bailouts with tax payer money.
I want stability and boring banks that makes long term loans to companies, instead of gambling on the stock market or exotic derivitives.
Banks should only be allowed to exist to serve society. Society should not exist to serve the banks.
We don't need banks. Agriculture and industry can exist without them. But banks cannot exist without industry, agriculture and mining.
So banks should always stand lowest and last on the priority list.
Priority should instead be given to supporting industrial development, and then supporting the service sector, agriculture and so on.
While banks.. well life would be harder without them, so its good that they exist, but their role should be a servant and not a master.
Amazing video!
Great explanation👍
Great job on your research
Thank you!
"Wat dat betreft,..."😉Thanks for sharing your knowledge!
now I know, why we needed to wait such a long time for your video.... I like it a looooooo! Schweizerische....the STRESS in on the FIRST syllabous. On "Schweiz"... the second (er) is hardly heard and the "e" is like "ä".
Hilarious. So Switzerland finally completed it's transformation into a Bank with a country.
This channel is by far a superior choice in terms of macro economics an geopolitics
You sir, are an admirable man
Have you though about making a video about argentina? I can't wrap my head around its situation!
Thank you for your great video, love them! What would be a negative consequence of UBS now being such a dominant part of the swiss banking economy? What are the long term ramifications here?
ah yes, we're having issues with our risky business. what should we do? oh, I know, let's expand into even riskier business! that'll solve all our problems!
Swiss here: Don't underestimate the Swiss govt. and esp the Swiss national Bank. We're not "Switzerland" by accident. In 2008 the SNB intervened massively to support UBS (toxic assets) and they eventually turned a very handsome profit in the end.
The CS UBS merger was set up very well by the regulator. CS will spin off their entire investment bank into their US subsidiary (First Boston) and thus get both KYC processes in order and the US tax payer hooked at the same time 😂
So the issue was if CS went down UBS likely fails as well, the bailout was for UBS as much as it was for CS. If UBS and CS were to fail the impact on the Swiss economy would have been huge furthermore the risk of contagion was a reality. In my mind not only was the SNB involved but also the ECB, Federal Reserve, and the UK financial regulators, they had been propping up CS since November and even earlier there was a push to merge CS into UBS. My suspicion is this plan was not hatched "over the weekend" as they described it but rather since the end of last year they had a plan for a shotgun wedding. As for Fink and those other jackals they planned to pick the carcass clean it makes sense why you wouldn't want to fire sale, the goal is likely an orderly wind down of those businesses and by combining UBS and CS IB it is a more attractive package to sell to an American IB.
great video, you did a good job. you are the mr money as we say in my.home province. the money man with the gold hands
Joeri, if you're filming in 4K you need to figure out how to nail the focus on your eyes! Aside from that, excellent content as usual :)
Thanks.
have anyone ever told you that you look like Roman Roy from the show Succession?
27:00 "Unfortunately, as I am not part of the Swiss banking circles, I cannot answer that question for you", he said calmly while definitely NOT smiling.
Goodbye Debit Suisse, our only regret is that we will no longer be able to make fun of you.
Great video on the mechanics of balance sheet expansion. Would be great to get into the business of dealer banks in the monetary system and money dealing as Jeff Snider & Perry Mehrling describes - would help people understand "money" as banks and non-banks in the system see it (collateralised loans) - vs money that you and I understand as consumers buying things.
More like Debit Swiss
CS like Switzerland, lost its financial and political independence a generation ago.
Underrated comment
Goddammit. What a great opportunity for a Murders and Executions reference?
Thanks for throwing gang signs while talking, wouldnt understand a thing without em
✌️
Dude those bankers that were beefing reminds me of glenn danzing and jerry only from the misfits beefing
It would be great if you'd make a video on how CS fall impact other relatively shaky European banks like Deutsche Bank or Commerz and on world bankng system in general
The suicide of the involved private investigators is pretty sus
Here is the compliment you clearly wanted, from a true capitalist: I put this on over an Indian Barber ASMR video to drift off to. Thank you for your many years of study, passion, and, more than that, your implied commitment to pursuing the cutting edge of.... waitt..... asmr... anyway, thanks man! Love what you do. Be well.
EDIT/PS: Rammsteinn really leaned hard into that logo of theirs. Didnt realize it was just the suisse logo shifted 90 degrees. Yikes! Killer live show...
Discredit Suisse.
love the gaming reference, your taxes are belong to us ;p
The Schweizerische Kreditanstalt SKA turned to "Credit Suisse" in the 90's not the 70s.
As someone else stated in the comments I think there needed to be a bank to fall in Europe to bring back "peace" and it was decided that it would be CS. For me the proof is that Deutsche Bank had the same kind of troubles around the same time and they actually carried on as if nothing happened after CS was "sacrificed". As said in the video there would have been other solutions if it had been about saving the Swiss bank part of CS (and from my point of view and what was relayed in the media at that time it was pretty clear that this part of the business would not have been at risk). I am personally blaming the horrendous lack of regulation for American small banks that sparked this entire mess, the only fact that they did not need to mark to market some of their assets seems beyond absurd to me, and don't even get me started on the lack of monitoring of those banks interest rate hedges... This then spread to European banks because of irrational panic, although European banks have much more stringent regulations (this partly explains their lack of profitability compared to American counterparts during the 2010s). There was never a problem of potential negative equity in any European bank to the best my knowledge before the entire bank run madness started...
11:56 made my blood boil 😡
😂😂
But now after the merger the UBS's debt will be even ''LESS ACCEPTED'' xD
To me the merger was even a poorer deal than a classic bail out ..but whatever. The ONLY plus here is that the credit swiss shaddy deals will continue to remain ANONYMOUS for the public . I smell Berreta's at someones head in all of this :)))
BECAUSE ITS SUCH A POOR DEAL
Your vid about china bank collapse age like fine wine after US and EU bank collapse one after another
I‘m Swiss and our government fucked up hard when it comes to the Credit Suisse collapse
Whats Switzerland now gonna do when ubs fails?
There was definitely information that couldn’t be shared outside of Switzerland. It wasn’t just a credit risk to the country - it was informational risk. Risk that could damage many reputations, including those in government. They had to bail CS out to save their own skins. IMO
You have to admit that we are going through some hard times when Swiss banks are collapsing
They did it to themselves, though. The collapse was a series of unforced errors coupled with some unfortunate circumstances. Sure the world is going through some really serious turbulence, but you can't blame this on just the global state of affairs.
5:06 "Banks are actually good for their debts." Except for when they famously, are not. And thus we find the universal paradox behind banks. It is not a matter of IF they will fail, but simply a question of WHEN.
Joeri, I generally enjoy your videos a lot as an economist, and I've specifically enjoyed this video as a Swiss. And now for some constructive criticism: 1) When you describe the beginnings of SKA, you just describe the general business model of a commercial bank in the normal fractional reserve system, but you make it sound unnecessarily sinister. 2) While assisting in tax evasion has almost always been immoral, it is unlikely that this was the decisive or even a major contributing factor to the success of Swiss wealth management banks. Foreign deposits have kept growing after the abolition of banking secrecy vis-à-vis foreign tax authorities and their increased growth during periods of high inflation suggests that the always relatively low inflation in Switzerland is much more important.
Holy crap. I love anonymity and decentralization but Switzerland's banking industry is as villainous as it gets. It's absolutely disheartening that they've already co-opted the cryptography-blockchain space with several centralized exchanges and "decentralized" protocols.
Who allowed you to post monthly 🤨 post weekly or I'll come to your house
Let's just say my research about why people are getting less kids got a little bit out of hand. At least I found out what having one does to your CZcams productivity.
@@MoneyMacro well in that case… congrats! 😅
@@MoneyMacro wow !
@@MoneyMacro congratulations on the new born!! God bless you and all of klm airlines!
whats the song at 17:00
I love you so much 😭
Im still itching my head wondering if he’s Australian, or British, he sounds like he’s in between them?
Oh wait I remember! Stroopwafels! Thats where he’s from.
Actually, it's more like Springbok steak... But we can consider Suid Afrika as an ancient subsidiary of Nederland
@@xabiervillanueva5147 hehe no no stroopwafels is correct. I just lived in Cape Town for a while.
And what happens when that new bank collapses, too? (Apart from the swiss finding out if they're really competitive in industries outside the financial sector and luxury goods ofc)🤔
wtf was that feud LOL?
great video ty
Video request: Has the Taylor Rule been validated by experience in the US?
Would the shit hit the fan if depositors were transformed in shareholders like in Cyprus not to long ago?
ugh, what happened to "Chiasso" (more or less should be pronounced "key-ass-aw")
Still looking for a research assistant? I'd love the opportunity
This is a great tale of fk around and find out.
As a Swiss I have never stopped smh since the spy scandal. What an absolute mess. Also, this CS aquisition is the most shady deal since JP Morgan bought Washington Mutual in 2008, and First Republic just this week...
6:27 LMAO
Better if he had made it a Publicly Owned Bank when he died. Having shareholders is the exact opposite because then only the wealthiest people have the majority ownership & have the power to make the decisions.
Now I understand the importance of regulation and central banks. But in Switzerland it seems that the regulators serve the banks.
So, what is the difference now between UBS and the SNB?
Hehe good question.
swiss banks upset me deeply
Schäum Täim Piriodä
In the 1990s Swissair initiated the disastrous “Hunter Strategy”, a major expansion programme devised by the consulting firm McKinsey & Co. Using this strategy, Swissair aimed to grow its market share through the acquisition of small airlines rather than entering into alliance agreements.
Wurzelbehandlung
Der Zaun, der arme Leute hindert
Der andere Zaun, der wirklich von Bruder Klaus stammt, gehört zu einer Vision des Eremiten, die von Zeitgenossen weiter erzählt wurde. In der sogenannten Brunnenvision wurden «sehr arme» Leute, «die schwere Arbeit taten», durch einen Zaun daran gehindert, im «leuchtenden» Innenraum aus einem Brunnen zu schöpfen, der durch einen «Tabernakel» gespeist wurde.
Es gab zwar ein «Gatter», aber durch dieses gelangte nur, wer den dort stehenden Abzockern einen Batzen bezahlen konnte: «Und bis die Leute das alles bezahlt hatten, waren sie so arm und schwach, dass sie nicht mehr die Kraft hatten, hereinzukommen; sie waren am Verhungern.»
All Stores Please Lower the cost of all Military and Local for all Brands of Economy Products and Accessories and Production Cost Now That's too much $$ The Whole World Now 🙏🙏🙏
more like Credit Sus
The thing people don't understand about banks is how vital they are for the economy they operate in. They always should be bailed at all costs, but it doesn't mean their practices should be scrutinized. They most definitely should. But not bailing a bank is never an option. Doing so would turn a financial problem into an economic problem.
Local Moneylending Banks. Not Investment Banks.
24:56
*Billions
It's still not clear why the bank run happened. I have no proofs, but guess it could be caused by the fact that many clients, especially chinese, realized that Switzerland, joinded counter Russian sanctions, can ruin the life of any investor
❤❤❤
cool
When I took an archaeology class, I told my friends that archaeologists can no longer find the hidden treasure from the pirates and tyrants, who only have to hide their treasure in the Swiss Bank. They agreed.
The presentation of economic theories is good but you under-emphasised the practical importance of the unique advantages that china derived from HK, from which china got most capital, commercial and financial know-how and international connections. Of course nowadays with HK’s freedom being stifled, its role would be much diminished
2:45 Weird that this guy was rewarded with one of the largest centralized banking empires to date for printing his own money whereas American citizens and Ghaddafi are literally executed for it. Really makes you think about the people that are ordering these laws/execution mandates.
American citizen's would not be executed if they started a bank