It's just for liquidity. If someone want's money, the banc can't give them a part of a house (where they give the credit).

Sorry, I can’t see anywhere in the article where they mention 100B. I’m I misunderstanding something?

It's the line of credit the UBS allegedly secured from the Swiss national bank

They've said in the press conference that SNB is providing 100B CHF in liquidity, and (IIUC) additionally the state is insuring UBS against 9B in losses from the deal.

100 Billion Swiss Franks (CHF) is the safety the National Bank is providing to Credit Suisse and UBS. It is not the purchase price.

The purchase price is 3B CHF.

Yes, and last week the backstop was 30B CHF. So why did they increase that by more than 3x within days? Makes no sense other than UBS finally looked at the books and freaked out.

>> Yes, and last week the backstop was 30B CHF. So why did they increase that by more than 3x within days? Makes no sense other than UBS finally looked at the books and freaked out.

There were likely internal (to CS) marks based on assumptions. The assumptions may have assumed baseline market conditions. External parties came in and didnt want to assume baseline market conditions and/or didnt agree with the assumptions, so they were changed to more conservative figures, and new marks came out. The new marks were significantly lower. They have veto power over the deal and the government was forced to backstop to make the deal happen.

UBS cant decide on that. The swiss goverment has to, and apparently it decided to make it more secure, because the market did not trust it's previous safety net.

No, the 100B CHF is just to bridge the liquidity. If they didn't provide this then Credit Suisse might need to sell a big chunk of its bond portfolio for further withdrawals - which would incur a big loss compared to holding the bonds until maturity. Same issue and fix as for Silicon Valley Bank. I don't know the terms for accessing this emergency liquidity but I assume it's not going to be cheap.

At market rates, it should cost the same as selling the bonds now.

And selling the bonds now would put them in the red.

So either they have been given better-than-market rates, or they're pulling some other accounting trick to make it look like there is more of value here than there really is...

> At market rates, it should cost the same as selling the bonds now.

You assume that the spread is zero and that there are actually buyers. But I might be wrong here, I don't know about the liquidity of these bonds.

as just confirmed in the press conference, the overall liquidity safety net is actually 200B CHF from SNB. Then 9B of guarantees from the Swiss government to UBS for potential risks

This deal makes no sense. They also wrote down some creditors to zero while equity holders got at least a few cents.

I’m not sure how Streisand effect is relevant here. Sufficiently large backstop removes panic because if the govnmt backstops enough there can’t be a loss for depositors. It’s always a balance between safety of depositors and liability of the government. But increasing backstop just ensures that depositors are ever safer.

PTSD from 2008 is very real. People will act first think later.

Credit Suisse is being sold for 70% lower than its price on Friday. Twitter is worth 13 Credit Suisses lmao.

They’re clearly insolvent without this, no? The Swiss government forced UBS to do this at gunpoint, why else would they do that