Credit Suisse leak unmasks criminals, fraudsters and corrupt politicians

[Silvio]

But most people here might have the funds to one day bank with traditional Swiss banks. So, the discussion is indeed pertinent. After all, you attacked the entire Swiss banking system, not just UBS and Credit Suisse.

In my opinion *most* Swiss banks are overrated and just coast on the reputation they had in the past, reputation they no longer live up to.

They are not private at all. CRS killed Swiss secrecy and it's not coming back.

As a non-resident they are extremely expensive compared to what you are actually getting. Banks in Singapore provide about the same services and are much more solid, and much cheaper to transact in. Also much less of a compliance hassle once you open the account.

Wealth management is a scam, charging you extremely high fees for funds that you can find in the open market for a fraction of the price. Over years these fees accumulate and eat a lot of your gains. Few weeks ago a Swiss bank actually offered me their "amazing portfolio" that made 6% per annum that is also investing in "startups" = Private Equity (upon detailed checking it us actually just holding some publicly owned PE funds\stocks... thank you guys I can buy KKR myself, I don't need to pay 5% front-load fee for that). A diversified non-correlated ETF portfolio will beat 99.99% of Swiss funds, guaranteed.

Yes, Swiss banks are "solid" and won't go bankrupt, but if you don't keep cash but instead keep your money in solid bonds\ETFs it doesn't matter as these are automatically kept in a segregated account. You are equally safe keeping your money in your Interactive Brokers account, and if it goes bankrupt tomorrow you'll still have your stocks\bonds.

I guess they are useful if you want to use their trust services, for succession planning and asset protection. Still you'll be paying a lot for what you get and below 5m I doubt it's worth the yearly costs. Maybe it would be worth it when you've already made your money and just want to protect it in an extremely conservative way. So for some people, worth it. But personally I'd rather go the Martin Everson way spreading the wealth over multiple accounts\jurisdictions rather than having a lot in one Swiss account- single point of failure.

 

[JackAlabama]

In my opinion *most* Swiss banks are overrated and just coast on the reputation they had in the past, reputation they no longer live up to.

They are not private at all. CRS killed Swiss secrecy and it's not coming back.

As a non-resident they are extremely expensive compared to what you are actually getting. Banks in Singapore provide about the same services and are much more solid, and much cheaper to transact in. Also much less of a compliance hassle once you open the account.

Wealth management is a scam, charging you extremely high fees for funds that you can find in the open market for a fraction of the price. Over years these fees accumulate and eat a lot of your gains. Few weeks ago a Swiss bank actually offered me their "amazing portfolio" that made 6% per annum that is also investing in "startups" = Private Equity (upon detailed checking it us actually just holding some publicly owned PE funds\stocks... thank you guys I can buy KKR myself, I don't need to pay 5% front-load fee for that). A diversified non-correlated ETF portfolio will beat 99.99% of Swiss funds, guaranteed.

Yes, Swiss banks are "solid" and won't go bankrupt, but if you don't keep cash but instead keep your money in solid bonds\ETFs it doesn't matter as these are automatically kept in a segregated account. You are equally safe keeping your money in your Interactive Brokers account, and if it goes bankrupt tomorrow you'll still have your stocks\bonds.

I guess they are useful if you want to use their trust services, for succession planning and asset protection. Still you'll be paying a lot for what you get and below 5m I doubt it's worth the yearly costs. Maybe it would be worth it when you've already made your money and just want to protect it in an extremely conservative way. So for some people, worth it. But personally I'd rather go the Martin Everson way spreading the wealth over multiple accounts\jurisdictions rather than having a lot in one Swiss account- single point of failure.

Indeed. Plus they dislike you holding "just" cash in large amounts due to negative interest rates which a) you can offset by buying these supergreat funds and products and b) you just pay a lot in fees including the negative interest rate of -0.75%.
b) being the better option
Credit suisse is however very generous with holding cash lol

 

[Golden Fleece]

Yes, Swiss banks are "solid" and won't go bankrupt, but if you don't keep cash but instead keep your money in solid bonds\ETFs it doesn't matter as these are automatically kept in a segregated account. You are equally safe keeping your money in your Interactive Brokers account, and if it goes bankrupt tomorrow you'll still have your stocks\bonds.

Well, that was exactly my point. Swiss banks are financially solid with the exception of UBS and Credit Suisse, which operate under the Western banking model (hence, all their problems). So, by virtue of the fact that Swiss banks are rock solid (unlike most banks throughout the world), they have their place in finance.

And no, unless you keep your stocks registered in your name, which is a hassle, you are not protected if your broker goes bankrupt (only to the extent of any government insurance). This is one of the biggest myths in finance. Your stock is simply entered as a journal entry as a liability, similar to cash in a bank.

• Holding stock and other investments in a street name means that rather than the asset being held in your name, it is held in the name of the brokerage firm.

• Technically, your brokerage firm owns the shares​

What Does It Mean to Own Shares of Stock in a Street Name?

The stocks you hold in your account at your broker/custodian are likely held in street name. They are registered to the broker or custodian, not you.

www.thebalance.com

These are both elemental concepts. It is astounding that these things are not common knowledge. It seems that no one bothers to perform basic research any more, even when their money is at risk.

 

[369]

And no, unless you keep your stocks registered in your name, which is a hassle, you are not protected if your broker goes bankrupt

Psssssst dont reveal the biggest secret of brokers and banks that people don't own stocks but just have a claim to them like with fiat money.
Go to eastern europe and try to find a broker or bank who is going to enter your name as owner .
Impossible under $250k

 

[Silvio]

And no, unless you keep your stocks registered in your name, which is a hassle, you are not protected if your broker goes bankrupt (only to the extent of any government insurance). This is one of the biggest myths in finance. Your stock is simply entered as a journal entry as a liability, similar to cash in a bank.

As far as I know this is not correct. Stocks (in reputable regulated jurisdictions) are held in a segregated account and they are NOT listed as bank asset in case of bankruptcy and can't be used to pay the banks' debts.

Happy to be proven wrong here.

Client Asset Segregation — Much Ado About Nothing or the End of the World as We Know It? – CapLaw

"As a consequence of this, the protection of assets in case of insolvency of an intermediary is granted irrespective of whether asset segregation is put in place or not. This does, of course, not exclude that asset segregation may be of use when proving proprietary interests in securities held with intermediaries (proof of claim)."

Same for Singapore:
".... is regulated and supervised by The Monetary Authority of Singapore. In compliance with section 104 of the Securities and Futures Act (“SFA”) and the provisions of the Securities and Futures Regulations (“SFR”), we protect your monies and assets by keeping them in client segregated accounts separated from our own with proper record keeping and controls put in place.
Section 104A of the SFA provides that monies and assets belonging to customers are not available for payment of PSPL’s debts and shall not be liable to be paid or taken in execution under an order or a process of any court."

And it's the same for Interactive Brokers:
"Client money is segregated in special bank or custody accounts, which are designated for the exclusive benefit of clients of IBKR. This protection (the SEC term is "reserve" and the CFTC term is "segregation") is a core principle of securities and commodities brokerage. By properly segregating the client's assets, if no money or stock is borrowed and no futures positions are held by the client, then the client's assets are available to be returned to the client in the event of a default by or bankruptcy of the broker."

 

[Golden Fleece]

As far as I know this is not correct. Stocks (in reputable regulated jurisdictions) are held in a segregated account and they are NOT listed as bank asset in case of bankruptcy and can't be used to pay the banks' debts.

I do not have time right now to fully research this issue, but this has always been my understanding regarding a brokerage bankruptcy, which is why the distinction between stock being in your name versus street name is so important:

In a Chapter 7 bankruptcy of a brokerage firm, the bankruptcy trustee is required to liquidate — that means sell — all of the securities held in "street name" by the failed brokerage.

The SIPC And SIPA Liquidations: When A Brokerage Firm Goes Bankrupt

It's an organization that can go for years without ever making the news. Then along comes a financial crisis -- and Lehman Brothers and Madoff -- and

bankruptcy.cooley.com

 

[369]

I do not have time right now to fully research this issue, but this has always been my understanding regarding a brokerage bankruptcy, which is why the distinction between stock being in your name versus street name is so important:

The SIPC And SIPA Liquidations: When A Brokerage Firm Goes Bankrupt

It's an organization that can go for years without ever making the news. Then along comes a financial crisis -- and Lehman Brothers and Madoff -- and

bankruptcy.cooley.com

I can't tell for banks but i know for sure brokers will use them as insolvency mass should they go bankrupt.I highly doubt it will be diffrent for banks as who cares when everything goes down including banks if retailers will keep their stocks or if it will be taken by institutions.

 

[Silvio]

I do not have time right now to fully research this issue, but this has always been my understanding regarding a brokerage bankruptcy, which is why the distinction between stock being in your name versus street name is so important:

The SIPC And SIPA Liquidations: When A Brokerage Firm Goes Bankrupt

It's an organization that can go for years without ever making the news. Then along comes a financial crisis -- and Lehman Brothers and Madoff -- and

bankruptcy.cooley.com

One article from 2009 isn't exactly deep research but If you would have thoroughly read your own article you would have seen that any customer in a US broker is insured up to $500,000 plus $100,000 for cash holdings by SIPA.

So it's not an elementary concept nor common knowledge because it's not true. If you keep your stocks at a reputable broker in a regulated jurisdiction, preferably a publicly-traded broker with transparent finances you'll be fine in an event of a bankruptcy. However, I do agree that having shares under your own name is safer so you're right about that.

P.S. the fact alone that Mr 369 agrees is clearly a sign that this is incorrect as this guy is wrong about everything

 

[369]

One article from 2009 isn't exactly deep research but If you would have thoroughly read your own article you would have seen that any customer in a US broker is insured up to $500,000 plus $100,000 for cash holdings by SIPA.

So it's not an elementary concept nor common knowledge because it's not true. If you keep your stocks at a reputable broker in a regulated jurisdiction, preferably a publicly-traded broker with transparent finances you'll be fine in an event of a bankruptcy. However, I do agree that having shares under your own name is safer so you're right about that.

P.S. the fact alone that Mr 369 agrees is clearly a sign that this is incorrect as this guy is wrong about everything

maxmmm has as always no clue what he is talking about.

The protection depends where your broker is located at.
The insurance amount are in US and Swiss fine however most european brokers have 20k euro as insurance for example.
Secondly what people are not talking since they are fully unaware is that brokers use peoples shares to lend for a fee by default.
If this happens and it happens in majority of time you high probably not recover your loss should the broker go bankrupt.
90% of stocks holdings are margins.

 

[Praetorian]

Most of the big swiss banks will bend the rules and will do anything for clients above a certain net worth. That includes banking dictators, criminals, known fugitives, even people flagged on OFAC sanctions or interpol.

These people like those banks not because of the secrecy (They aren't stupid), but because they know their private banking contact at that bank doesn't give a f**k about laws and regulations and will accept deposits without asking questions.

It used to be the case in many other places (Luxembourg, Netherlands, Monaco), but those countries have tightened up their banking sectors while Switzerland is still a haven for dirty money, regardless of CRS.

Switzerland will face a lot more pressure now that Credit Suisse keeps f*****g up on such big proportions so i suspect they'll have no choice to stop being cowboys or at least greatly reduce the number of risky clients they can take in and limit it to extremely wealthy folks (Dictators and their families, billionaires that aren't russian, etc).

 

[Golden Fleece]

A perfect example of what I mean when I say that UBS and Credit Suisse operate no differently than Western banks, which is why you should avoid them like the plague. By contrast, most other Swiss banks are well run.

If you have the time, it is well worth reading this entire article. It is a microcosm of the type of mindless risk-taking that will eventually cause the Western banking system to collapse, through a cascading series of margin calls and financial disasters.

Unbeknownst to the management of ViacomCBS, a mysterious character with a dubious ethical track record had convinced many of the largest and most prestigious banks in the world, including Goldman Sachs, Nomura, Credit Suisse, UBS, and the aforementioned Morgan Stanley, to use their balance sheets to help him effectively amass a huge stake in the company while simultaneously circumventing reporting rules established by the US Securities and Exchange Commission (SEC).

Why do our largest, most well-resourced banks demonstrate absolute incompetence in risk management and compliance?

ViacomCBS’s ill-timed raise was the grain of sand that grew into an avalanche of losses that ultimately measured over $10 billion.

Nickel In Front of a Steamroller

When the LME acted out of existential desperation, it may have catalyzed its certain demise all the same.

doomberg.substack.com

 

[JohnnyDoe]

After 2008, only janitors and psycho monkeys are left in banks. The letters being in charge of operations. There is no exception: anyone with a functioning brain working in a bank would have changed job after 2008.
It’s useless to talk about where banks are better, which bank is better etc… it’s only a question of luck: any bank works until your file ends on the desk of an idiot, which is certain to happen, eventually.

 

[Golden Fleece]

It’s useless to talk about where banks are better, which bank is better etc… it’s only a question of luck: any bank works until your file ends on the desk of an idiot, which is certain to happen, eventually.

That is simply not true. Some countries -- and many individual banks (outside the Western banking system) -- retain far higher liquid cash reserves than Western banks do. In fact, some banks do not lend out any of their customer's deposits at all. Of course, these banks must charge far higher fees than typical banks, because they do not profit by the use of their customers' money.

 

[JohnnyDoe]

That is simply not true. Some countries -- and many individual banks (outside the Western banking system) -- retain far higher liquid cash reserves than Western banks do. In fact, some banks do not lend out any of their customer's deposits at all. Of course, these banks must charge far higher fees than typical banks, because they do not profit by the use of their customers' money.

It’s useless to look at a bank’s balance sheet (which can very well be cooked anyway). A bank is made of persons, and I don’t know any bank where decent human beings work. Try to take custody of some money from a friend, and act with him as a bank would with a customer - then tell me how long it will take for your friend to punch your face.

 

[Golden Fleece]

It’s useless to look at a bank’s balance sheet (which can very well be cooked anyway). A bank is made of persons, and I don’t know any bank where decent human beings work. Try to take custody of some money from a friend, and act with him as a bank would with a customer - then tell me how long it will take for your friend to punch your face.

If you are totally paranoid to the point of being delusional, then I agree there are no banking options that will satisfy you. But most of us operate in the real world where banking is still necessary. And not every country -- or every bank -- is a snake pit of human depravity.

BTW: It sounds more like you are describing the crypto world, where you can never be completely safe from a total loss of wealth from criminal hackers, the loss of the internet, hardware malfunctions, or a host of other issues. By comparison, the banking world is relatively tame.

 

[369]

If you are totally paranoid to the point of being delusional, then I agree there are no banking options that will satisfy you. But most of us operate in the real world where banking is still necessary. And not every country -- or every bank -- is a snake pit of human depravity.

BTW: It sounds more like you are describing the crypto world, where you can never be completely safe from a total loss of wealth from criminal hackers, the loss of the internet, hardware malfunctions, or a host of other issues. By comparison, the banking world is relatively tame.

in dubai there are banks where your fiat is backed 1:1 with gold

 

[Golden Fleece]

in dubai there are banks where your fiat is backed 1:1 with gold

Yes, and as I noted earlier, there are also banks that do not lend out their customer's deposits. There are plenty of options in the banking world. But you will pay for the privilege of banking with such rock-solid firms.

 

[thirtyniner]

Same problem all the time! They look into the numbers and never into the business essence! Although they allegde totally the opposite as a facade!

If the only problem of off-shoring was tax avoidance the world would be a much better place!

 

[gengiskhan]

More trouble at CS

Credit Suisse Warns of Another Loss as Capital Recedes​

Credit Suisse Warns of Another Loss as Capital Recedes

The Swiss bank’s warning is an early sign that the disruption in financial markets since Russia invaded Ukraine is hitting activity among big international banks.

www.wsj.com

 

[Golden Fleece]

More trouble at CS

Credit Suisse Warns of Another Loss as Capital Recedes​

Credit Suisse Warns of Another Loss as Capital Recedes

The Swiss bank’s warning is an early sign that the disruption in financial markets since Russia invaded Ukraine is hitting activity among big international banks.

www.wsj.com

It is always the banks that are notorious for overextending themselves with too much leverage (i.e., that take on too much risk) that succumb first to any burgeoning financial crisis.