5/3/2023 0 Comments Outlook drive![]() The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Financial engineering squared was never a good idea and it really risking a failure of the whole banking model itself. The 3-6-3 banking model (borrow at 3%, lend at 6% and hit the golf course at 3 p.m.) died in 2008 and was replaced by ‘Financial Engineering’ as both the main earner with clients but also the sharpest tool in risk management of the banks. The banking system has been diluted from accountability as crisis by crisis has left regulators and central banks accepting more accrued losses and left capital requirements weak, insufficient and worst of all based on internal models designed by the banks themselves. ![]() This to me is once again short-term and short-sighted policy response to an essential problem. This forces rerating and probably massive repricing of CoCo bonds on the market open in Europe tomorrow. ![]() In a bail-out, AT1 bonds will be written down to zero. ![]() The accelerating concern in the market was crystallized at the weekend with the Credit Suisse takeover deal: the Swiss National Bank, single handed, has put every investor in AT1 on notice.
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