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Tag: Credit Suisse

  • JPMorgan CEO Jamie Dimon Working on First Republic Rescue Plan

    JPMorgan CEO Jamie Dimon Working on First Republic Rescue Plan

    JPMorgan CEO Jamie Dimon is reportedly leading the charge to save First Republic Bank and restore confidence in the bank.

    First Republic is facing its worst crisis in 15 years on the heels of three other banks collapsing. Silicon Valley Bank collapsed in early March, and Signature Bank followed shortly after. Meanwhile, Credit Suisse’s freewheeling ways finally caught up with it, leading to its sale to rival UBS.

    According to The Wall Street Journal, Dimon is leading a coalition of banks that are trying to keep First Republic from following SVB and Signature. Dimon helped orchestrate eleven banks in depositing $30 billion into First Republic in an effort to restore confidence.

    The assisting banks have yet to rule out converting the deposit into a straight cash infusion if necessary.

    Either way, the lengths Dimon and his fellow bankers are going to demonstrate the fragility of the current economic situation.

  • Credit Suisse Collapses, Sells to Rival UBS

    Credit Suisse Collapses, Sells to Rival UBS

    Credit Suisse has reached an agreement to be purchased by rival UBS, ending its 167-year run as an independent institution.

    Credit Suisse developed a reputation for taking risks that many other banks wouldn’t. As The Wall Street Journal reports, the bank emerged from the 2008 crisis stronger than many rivals, a position that emboldened it to continue its freewheeling style.

    “They felt, ‘We are the winner from the financial crisis, and everyone else is hurt,’” said Andreas Venditti, a Vontobel banking analyst. “So they doubled down on these kinds of businesses and on investment-banking exposure in general.”

    Unfortunately, the bank’s reputation caught up with it, and amid the economic downturn and failing banks, investors were more rattled than expected. The bank’s stocks tanked, and it struggled to compete with other banks for deals critical to its survival.

    “Credit Suisse’s problem for decades, and I really mean decades, is terrible operational risk management,” said Mayra Rodriguez Valladares, a U.S.-based consultant bank regulation consultant. “Everyone lets them get away with it: The U.K., the U.S., the Swiss.”

    While regulators may have let Credit Suisse get away with its antics, the market didn’t.

  • Credit Suisse Cancels Exec Bonuses Admits ‘Material Weakness’

    Credit Suisse Cancels Exec Bonuses Admits ‘Material Weakness’

    Credit Suisse has cancelled bonuses for its executives, citing “material weakness” in its financial reporting.

    According to CNN, Credit Suisse delayed its annual report after the SEC raised questions about 2019 and 2020 cash flow statements. As a result, the company took a closer look and concluded that “the group’s internal control over financial reporting was not effective,” and failed to identify potential risks.

    In addition, the company’s board found that “material weakness could result in misstatements of account balances or disclosures that would result in a material misstatement to the annual financial statements of Credit Suisse,” the annual report said. The company is working on a “remediation plan” to strengthen controls, according to CNN.

    In the meantime, Credit Suisse is canceling bonuses for its executives, and chairman Axel Lehmann has offered to “voluntarily “waive” a $1.6 million stock award as a result of the company’s “poor financial performance.”

  • Microsoft Azure Is a Major Threat to AWS

    Microsoft Azure Is a Major Threat to AWS

    Multiple reports are showing that Microsoft Azure is increasingly becoming a major threat to AWS in the cloud space.

    AWS is the current market leader among public cloud providers, with Microsoft Azure in second place and Google Cloud in third. Despite AWS’s lead, according to the Flexera 2022 State of the Cloud Report, Azure usage has surpassed AWS in several instances, representing the first time this has happened in 11 years of Flexera’s reporting:

    As in previous years, AWS, Azure and Google Cloud Platform are the top three public cloud providers. But for the first time, Azure has closed the gap with AWS, while other cloud providers have not shown much growth. For each public cloud provider, respondents specified whether they’re running significant workloads in that cloud, running some workloads, experimenting, plan to use it or had no plans to use it.

    Interestingly, Azure took the lead in overall breadth of adoption among organizations:

    Azure passed AWS for breadth of adoption among enterprises. Google Cloud Platform has the highest percentage for experimentation (23 percent) and Oracle Cloud Infrastructure has the highest percentage of plan to use (twelve percent), which could drive more adoption in future years.

    Azure also scored a win among “enterprises running some or significant workloads on the platforms.” While Azure tied with AWS at 47% of organizations using it for significant workloads, it surpassed AWS among organizations using it for some workloads, at 33% vs 30%.

    Of the top six cloud providers, Azure was the only one that saw its adoption rate increase year-over-year, coming in at 80% in 2022 vs 76% in 2021. In contrast, AWS adoption rates dropped in 2022 to 77%, down from 79% in 2021. Similarly, Google dropped from 49% to 48% and Oracle dropped from 32% to 27%. IBM Cloud’s adoption rate stayed steady at 25%, while Alibaba dropped from 13% to 11%.

    While Flexera’s report is telling enough, it’s supported by a new report from Credit Suisse. According to Investing.com, Credit Suisse analysts outlined how “Azure has grown meaningfully faster than AWS” and, as companies transition to the cloud, “the full multi-year impact of Azure’s growth opportunity is still not properly reflected in consensus estimates.”

    Overall, the two reports are excellent news for Microsoft and dovetail with previous reports demonstrating the growth potential of Azure.

  • Credit Suisse Pleads Guilty to U.S. Tax Evasion

    Credit Suisse Pleads Guilty to U.S. Tax Evasion

    Swiss banking firm Credit Suisse this week pleaded guilty to U.S. tax evasion charges. According to the U.S. Department of Justice, Credit Suisse is the largest bank to plead guilty to such charges in over two decades.

    The case surrounds a years-long investigation by the U.S. government into a conspiracy to aid U.S. taxpayers in avoiding taxes. The charges allege that Credit Suisse and its subsidiaries “actively” participated in helping account holders deceive the Internal Revenue Service (IRS) through the use of undeclared bank accounts. The bank used offshore accounts under false business names to shield its customers’ funds from the U.S.

    The Justice Department‘s investigation revealed that Credit Suisse’s involvement in the conspiracy spanned decades and involved hundreds of the bank’s employees. At least one Credit Suisse subsidiary is alleged to have been helping Americans evade tax payments for over 100 years. Attorney General Eric Holder stated that Credit Suisse destroyed bank records, concealed bank transactions, flouted banking disclosure requirements, and destroyed documents sought by the Justice Department as part of its investigation.

    Credit Suisse will pay more than $2.6 billion to U.S agencies as part of the plea agreement. $1.3 billion will be paid to the U.S. as a fine, $670 million will be paid as restitution to the IRS, $100 million will be paid to the Board of Governors of the Federal Reserve, and $715 million will be paid to the New York State Department of Financial Services.

    The Justice Department characterized the guilty plea as an example that the department is not influenced by big business.

    “This case shows that no financial institution, no matter its size or global reach, is above the law,” said Holder. “When the Department of Justice conducts investigations, we will always follow the law and the facts wherever they lead. We will never hesitate to criminally sanction any company or individual that breaks the law. A company’s profitability or market share can never and will never be used as a shield from prosecution or penalty. And this action should put that misguided notion definitively to rest.”

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  • RIM Not Worth Buying or Splitting Up, Says Analyst

    Although RIM impressed investors by not losing quite as much money this past quarter as was predicted, the company is still hemorrhaging its U.S. smartphone market share to Apple and Google and losing money. The company is banking its fortunes on its upcoming BlackBerry 10 OS, but the software and accompanying phones won’t hit store shelves until next year, well after the holiday shopping season. RIM has resorted to desperate measures to string developers along until then.

    Today, All Things D is quoting a Credit Suisse analyst as saying RIM isn’t even in good enough shape to be bought or to spin off its divisions. The All Things D report quotes Kulbinder Garcha:

    “Any deal for [the] company is highly complex in our view, requiring simultaneous management of a declining business, as well significant restructuring, and as such an acquirer maybe be best advised to wait for [the company] to shrink meaningfully before making any potential move,” Garcha theorized, adding that he’s not sure there’s anyone out there who could turn RIM into a winning play.

    Garcha followed up by saying a sell-off of RIM’s various assets might not go well either. He questions the quality of RIM’s patent portfolio and states that RIM’s network operations center would be costly to convert for other operating systems. Garcha estimates RIM’s global smartphone share will decline to 2.5% next year.