Hello and welcome to today's podcast. In this episode, we will be discussing the recent deal finalized between UBS Group AG and Credit Suisse Group AG, which has made headlines across the global banking industry. Let us take a deep dive into the series of events that unfolded resulting in a historic deal being brokered by the Swiss government late on Sunday to arrest the ongoing crisis at Credit Suisse into a full-blown international banking crisis.Credit Suisse, with a rich history of over 160 years, has helped put Switzerland in a strong position in the field of international finance. However, the bank has been embroiled in multiple scandals, legal issues, and changes in management, leading to a crisis of confidence among its investors. The bank has struggled to reach its peak of 2007, as its assets have declined to around $580 Bn, which is approximately 50% of UBS assets.In 2021, the collapse of investment fund Archegos and Greensill Capital triggered sharp selloff in Credit Suisse shares. The multiple changes in top managements since 2021, failed to generate investor confidence in the restructuring plans aimed at aiding the ailing bank.The bank further confirmed in February that it faced redemptions amounting to 110 Bn CHF in the fourth quarter, while they also declared their largest annual loss since the Financial Crisis amounting to 7.2 Bn CHF. The ongoing international banking crisis, post the collapse of Silicon Valley Bank, accelerated issues for Credit Suisse group after its top shareholder, Saudi National Bank, decided last Wednesday that they would not invest more in the Swiss lender. Credit Suisse Group AG is on the list of top 30 systemically important banks, and the authorities were worried about the ramifications if it were to fail. UBS Group AG has agreed to rescue Credit Suisse Group AG for about 3 Bn CHF ($3.3 Bn) in an all-share deal, further backed by extensive guarantees and liquidity provisions. The deal is deemed to be historic, complex and unique and is expected to be complete by end of 2023The deal is at a hefty discount from the bank’s valuation of 100 Bn CHF at its 2007 peak. As a component of the agreement, Credit Suisse will have around 16 Bn CHF ($17.3 Bn) in AT1 bonds written down. According to UBS Chairman Colm Kelleher, the bank is enthusiastic about Credit Suisse's wealth management and Swiss business but not so much about its investment bank. The combined company is set to manage $5 trillion of client assets, and UBS aims to retain Credit Suisse's profitable Swiss unit, despite concerns about domestic market concentration arising out of the deal. However, the investment bank is expected to shrink, putting an end to any hopes of a CS First Boston spinoff.Although clarity is yet to emerge on how many jobs will be affected by the merger, UBS has indicated that it will be significant. The bank plans to cut the combined company's annual cost base by over $8 Bn by 2027, which is almost half of Credit Suisse's expenses from the previous year.Both banks have unrestricted access to the Swiss National Bank's liquidity facilities, and the Swiss government has pledged to cover up to 9 Bn CHF in losses from specific assets that UBS assumes as part of the transaction. In the event of losses UBS will assume the initial 5 Bn CHF of losses and the federal government will absorb the next 9 Bn CHF. If losses extend further, UBS will absorb the rest. The government guarantee was essential to get the deal over the line as UBS had very little time to conduct a thorough due-diligence, especially due to the “hard-to-value” nature of some of the assets that UBS plans to wind down. The merger of Switzerland's two largest and most renowned banks, both with rich histories that go back to the mid-1800s, represents a significant blow to Switzerland's image as a prominent financial hub. This move puts the country on the verge of having only one leading national bank, thereby likely diminishing its status as a financial centre on the world stage.In an Indian context, one must note that even though Credit Suisse has more relevance than Silicon Valley bank, the bank has limited operations in the country and represents 0.1% share in assets. Indian banking space is safeguarded by strong banking regulation put in place. As per RBI rules, banks must mandatorily park 18% of their deposits in the statutory liquidity ratio (SLR) and another 4.5% in the cash reserve ratio (CRR). Also, the asset quality of Indian banks is strong and improving.

Hello and welcome to today's podcast. In this episode, we will be discussing the recent deal finalized between UBS Group AG and Credit Suisse Group AG, which has made headlines across the global banking industry. Let us take a deep dive into the series of events that unfolded resulting in a historic deal being brokered by the Swiss government late on Sunday to arrest the ongoing crisis at Credit Suisse into a full-blown international banking crisis.Credit Suisse, with a rich history of over 160 years, has helped put Switzerland in a strong position in the field of international finance. However, the bank has been embroiled in multiple scandals, legal issues, and changes in management, leading to a crisis of confidence among its investors. The bank has struggled to reach its peak of 2007, as its assets have declined to around $580 Bn, which is approximately 50% of UBS assets.In 2021, the collapse of investment fund Archegos and Greensill Capital triggered sharp selloff in Credit Suisse shares. The multiple changes in top managements since 2021, failed to generate investor confidence in the restructuring plans aimed at aiding the ailing bank.The bank further confirmed in February that it faced redemptions amounting to 110 Bn CHF in the fourth quarter, while they also declared their largest annual loss since the Financial Crisis amounting to 7.2 Bn CHF. The ongoing international banking crisis, post the collapse of Silicon Valley Bank, accelerated issues for Credit Suisse group after its top shareholder, Saudi National Bank, decided last Wednesday that they would not invest more in the Swiss lender. Credit Suisse Group AG is on the list of top 30 systemically important banks, and the authorities were worried about the ramifications if it were to fail. UBS Group AG has agreed to rescue Credit Suisse Group AG for about 3 Bn CHF ($3.3 Bn) in an all-share deal, further backed by extensive guarantees and liquidity provisions. The deal is deemed to be historic, complex and unique and is expected to be complete by end of 2023The deal is at a hefty discount from the bank’s valuation of 100 Bn CHF at its 2007 peak. As a component of the agreement, Credit Suisse will have around 16 Bn CHF ($17.3 Bn) in AT1 bonds written down. According to UBS Chairman Colm Kelleher, the bank is enthusiastic about Credit Suisse's wealth management and Swiss business but not so much about its investment bank. The combined company is set to manage $5 trillion of client assets, and UBS aims to retain Credit Suisse's profitable Swiss unit, despite concerns about domestic market concentration arising out of the deal. However, the investment bank is expected to shrink, putting an end to any hopes of a CS First Boston spinoff.Although clarity is yet to emerge on how many jobs will be affected by the merger, UBS has indicated that it will be significant. The bank plans to cut the combined company's annual cost base by over $8 Bn by 2027, which is almost half of Credit Suisse's expenses from the previous year.Both banks have unrestricted access to the Swiss National Bank's liquidity facilities, and the Swiss government has pledged to cover up to 9 Bn CHF in losses from specific assets that UBS assumes as part of the transaction. In the event of losses UBS will assume the initial 5 Bn CHF of losses and the federal government will absorb the next 9 Bn CHF. If losses extend further, UBS will absorb the rest. The government guarantee was essential to get the deal over the line as UBS had very little time to conduct a thorough due-diligence, especially due to the “hard-to-value” nature of some of the assets that UBS plans to wind down. The merger of Switzerland's two largest and most renowned banks, both with rich histories that go back to the mid-1800s, represents a significant blow to Switzerland's image as a prominent financial hub. This move puts the country on the verge of having only one leading national bank, thereby likely diminishing its status as a financial centre on the world stage.In an Indian context, one must note that even though Credit Suisse has more relevance than Silicon Valley bank, the bank has limited operations in the country and represents 0.1% share in assets. Indian banking space is safeguarded by strong banking regulation put in place. As per RBI rules, banks must mandatorily park 18% of their deposits in the statutory liquidity ratio (SLR) and another 4.5% in the cash reserve ratio (CRR). Also, the asset quality of Indian banks is strong and improving.

Spark Private Wealth - Financial News Update podcast

UBS and Credit Suisse deal

Welcome to today's podcast, in which we will discuss about the recent crisis at Silicon Valley Bank (SVB), one of the most prominent bankers in the start-up ecosystem. This crisis is shaping up to be one of the worst banking crises post the Global Financial Crisis.Established in 1983, SVB has been one of the major bankers to the start-up ecosystem. In the past two years, SVB's deposit book has grown threefold, to over $190 billion. However, the bank was unable to grow its loan book at a comparable rate. Hence the bank had invested over $80 billion in long term securities such as Mortgage-Backed Securities (MBS).SVB invested short-term liabilities, such as term deposits from start-ups, into long-term assets, specifically Mortgage-Backed Securities. Unfortunately, this created an Asset Liability Mismatch, which became problematic when the Federal Reserve increased interest rates. The value of SVB's assets fell, while the liabilities remained the same. At the same time as Fed reduced liquidity, due to which the venture capital money started drying up. Start-ups, instead of, depositing additional money started withdrawing money from SVB. To summarize, the price of SVB’s assets declined, and the depositors started asking for money. The only option available was to sell their assets at a loss. On 9th March, SVB Financial Group, the parent company of SVB bank announced that they have sold securities worth $21 billion of their portfolio at a loss of $1.8 billion and were raising another $2.25 billion in equity and debt to restructure its balance sheet. The announcement shook investor confidence, who believed that SVB had enough liquidity and would not need to sell their portfolio.The last nail in the coffin which escalated the situation was the collapse of Silvergate, a bank that primarily catered to the crypto industry. This further deteriorated the sentiment and led to significant deposit outflow from the bank by the start-up industry. Many venture firms started advising their portfolio companies to withdraw their funds from SVB.This crisis can be encapsulated into 4 key issues1. Correction of Asset prices,2. Deposits growth being stagnant,3. Depositors withdrawing their money and creating a run on the bank4. Poor Investor sentimentAs a result Moody’s has downgraded the issuer rating of SVB to “C” from “Baa1”Since the bank has collapsed, experts in the industry are concerned about a wider implication on the health of the start-up ecosystem. As many start-ups have their deposits with SVB, the inability to access their funds could lead them to default or delay payments to various parties, such as employees and vendors.US regulators are now all hands on deck to salvage the situation. It remains to be seen whether this snowballs into a widespread crisis or remains restricted to a bank and its depositors. We continue to monitor the situation and will provide updates as more clarity emerges.  latest episode!

Welcome to today's podcast, in which we will discuss about the recent crisis at Silicon Valley Bank (SVB), one of the most prominent bankers in the start-up ecosystem. This crisis is shaping up to be one of the worst banking crises post the Global Financial Crisis.Established in 1983, SVB has been one of the major bankers to the start-up ecosystem. In the past two years, SVB's deposit book has grown threefold, to over $190 billion. However, the bank was unable to grow its loan book at a comparable rate. Hence the bank had invested over $80 billion in long term securities such as Mortgage-Backed Securities (MBS).SVB invested short-term liabilities, such as term deposits from start-ups, into long-term assets, specifically Mortgage-Backed Securities. Unfortunately, this created an Asset Liability Mismatch, which became problematic when the Federal Reserve increased interest rates. The value of SVB's assets fell, while the liabilities remained the same. At the same time as Fed reduced liquidity, due to which the venture capital money started drying up. Start-ups, instead of, depositing additional money started withdrawing money from SVB. To summarize, the price of SVB’s assets declined, and the depositors started asking for money. The only option available was to sell their assets at a loss. On 9th March, SVB Financial Group, the parent company of SVB bank announced that they have sold securities worth $21 billion of their portfolio at a loss of $1.8 billion and were raising another $2.25 billion in equity and debt to restructure its balance sheet. The announcement shook investor confidence, who believed that SVB had enough liquidity and would not need to sell their portfolio.The last nail in the coffin which escalated the situation was the collapse of Silvergate, a bank that primarily catered to the crypto industry. This further deteriorated the sentiment and led to significant deposit outflow from the bank by the start-up industry. Many venture firms started advising their portfolio companies to withdraw their funds from SVB.This crisis can be encapsulated into 4 key issues1. Correction of Asset prices,2. Deposits growth being stagnant,3. Depositors withdrawing their money and creating a run on the bank4. Poor Investor sentimentAs a result Moody’s has downgraded the issuer rating of SVB to “C” from “Baa1”Since the bank has collapsed, experts in the industry are concerned about a wider implication on the health of the start-up ecosystem. As many start-ups have their deposits with SVB, the inability to access their funds could lead them to default or delay payments to various parties, such as employees and vendors.US regulators are now all hands on deck to salvage the situation. It remains to be seen whether this snowballs into a widespread crisis or remains restricted to a bank and its depositors. We continue to monitor the situation and will provide updates as more clarity emerges.  latest episode!

13th March - Silicon Valley Bank Crisis

In today's show, we will be talking about the changes in taxation for income generated from Market Linked Debentures or MLDs announced as per Budget 2023. In the world of investments, investors typically evaluate products based on their risk-return profile and how they fit in with their existing portfolio. However, tax considerations also play a crucial role. Unlike normal debentures, which offer a fixed rate of interest at a defined frequency, MLDs generate returns linked to a market instrument like the Nifty 50 index/G-Sec Index. The returns from MLDs vary based on the performance of the external benchmark, and the return on MLDs is paid at the end of its tenor along with the principal value Under the recent Budget 2023 proposals, there have been changes in the taxation of income generated from Market Linked Debentures (MLDs). Previously, MLDs were taxed at a flat rate of 10% if held for more than 12 months. However, as per the new proposals, the income from MLDs will now be taxed at the investor's slab rate. This is why MLDs were a popular investment option for HNIs, as they enjoyed a lower tax of 10% if held for more than a year. However, with the new proposals, the tax benefits of investing in MLDs have diminished, which could impact their popularity among investors. With the recent regulatory change, many investors who have completed 1 year of holding but still have some time to maturity are looking to sell their MLDs as they have a limited window to take advantage of the tax arbitrage. This selling pressure and the demand-supply mismatch is expected to present itself in the form of higher yields on these papers. This presents an opportunity for investors with surplus liquidity to deploy in these MLDs at significantly high yields for a short time period. The high yields are an effect of a regulatory change and not a structural issue within the underlying entity, thereby getting a better price for the credit risk. To re-iterate today's episode is on the recent change in MLD taxation. However, for any tax related advice please consult your tax advisors Disclaimer: Please note that this podcast has been created for educational purpose only. The views and opinions expressed in the podcast should not be construed as a recommendation or an investment advice.

In today's show, we will be talking about the changes in taxation for income generated from Market Linked Debentures or MLDs announced as per Budget 2023.In the world of investments, investors typically evaluate products based on their risk-return profile and how they fit in with their existing portfolio. However, tax considerations also play a crucial role.Unlike normal debentures, which offer a fixed rate of interest at a defined frequency, MLDs generate returns linked to a market instrument like the Nifty 50 index/G-Sec Index. The returns from MLDs vary based on the performance of the external benchmark, and the return on MLDs is paid at the end of its tenor along with the principal valueUnder the recent Budget 2023 proposals, there have been changes in the taxation of income generated from Market Linked Debentures (MLDs). Previously, MLDs were taxed at a flat rate of 10% if held for more than 12 months. However, as per the new proposals, the income from MLDs will now be taxed at the investor's slab rate.This is why MLDs were a popular investment option for HNIs, as they enjoyed a lower tax of 10% if held for more than a year. However, with the new proposals, the tax benefits of investing in MLDs have diminished, which could impact their popularity among investors.With the recent regulatory change, many investors who have completed 1 year of holding but still have some time to maturity are looking to sell their MLDs as they have a limited window to take advantage of the tax arbitrage. This selling pressure and the demand-supply mismatch is expected to present itself in the form of higher yields on these papers.This presents an opportunity for investors with surplus liquidity to deploy in these MLDs at significantly high yields for a short time period. The high yields are an effect of a regulatory change and not a structural issue within the underlying entity, thereby getting a better price for the credit risk.To re-iterate today's episode is on the recent change in MLD taxation. However, for any tax related advice please consult your tax advisorsDisclaimer: Please note that this podcast has been created for educational purpose only. The views and opinions expressed in the podcast should not be construed as a recommendation or an investment advice.

07 Feb 2023 - Change in Market Linked Debentures (MLDs) Taxation

This weekly news update podcast is created to present to you the latest happenings from the world of finance. Spark Private Wealth is a subsidiary of the Spark Capital Group, and through this podcast we take this opportunity to extend the core DNA of the Spark Capital group i.e., Knowledge, Integrity, Trust & Transparency to help Business Owners/Promoters, Family Offices, New Age Entrepreneurs and CXOs navigate the world of finance which is full of opportunities and risks. Disclaimer: Please note that this podcast has been created for educational purposes only. The views and opinions expressed in the podcast should not be construed as a recommendation or any kind of investment advice.

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Spark Private Wealth - Financial News Update podcast

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