Subscribe to this blog's feedOver the weekend, someone at Bridgewater Associates leaked the results of a study on the credit crisis to a Swiss paper- headline figure is total losses of $1.6 trillion. The original article in German is here.
Also, a startling report from another Swiss paper (English summary here) - new capital requirement rules including a leverage limit from the federal bank regulator, the EBK, could (according to one Swiss MP) mean that UBS and Credit Suisse have to raise massive additional amounts of capital - SFr 40 billion for UBS and SFr 30 billion for Credit Suisse. UBS, which said only last week it had no plans to raise more capital, dismissed the proposal as "a bit of a joke" when I spoke to them today. Nothing's definite until autumn, when the EBK announces its formal proposal.
It goes without saying that this would be catastrophic for the banks - UBS' market cap at present is only SFr 56 billion and Credit Suisse is at SFr 45 billion.
Moody's, too, is gloomy about UBS: downgrading them to B- (financial strength) and Aa2 today, analyst Elisabeth Rudman wrote "The bank has initiated many changes to senior management, risk management, and, more recently, corporate governance, but it is not yet
clear whether these changes will be effective considering the complexity of the task... A robust risk management framework will be a vital factor for the bank's overall creditworthiness. UBS is still undertaking a strategic review of its investment banking operations and the future of the bank's FICC (fixed income, currencies and commodities) division is less clear..."
