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by JumpCrisscross 1181 days ago
Didn’t think about the inversion in paying off Credit Suisse shareholders. The entire EU CoCo scheme may have just unraveled.
1 comments

Cocos should have converted to shares, which would have probably doubled / trebbled / more the float, then the proceeds of the sale disbursed. Either way would have been ~10c in the dollar for all parties? Either way a CoCo is not the same product (from the perspective of a buyer) as it was assumed to be last week.

It does look a bit like they have just done the full cycle of insolvency to bankruptcy to selling off the pieces and distributing the proceeds in a 48 hour window. UBS are (effectively) not buying "Credit Suisse", they are buying the post bankruptcy assets (which somehow had a market cap of ~7bn at the close of market trading and Friday).

Obviously for a to-big-to-fail bank you cant go through all the steps.

Does Switzerland not have receivership? The American model of freezing the bank and then dealing with non-depositors later seems such a better model.
I assume the intention is to reassure the market, but it actually looks like blind panic.