Greensill blowup spatters UK, Credit Swisse

[Winehole23]

British nonbank skirts financial fitness tests, receives emergency COVID dosh for banks.

The collapse of UK-based supply chain finance firm Greensill Capital continues to reverberate. In Germany the private banking association has paid out around €2.7 billion to more than 20,500 Greensill Bank customers as part of its deposit guarantee scheme after the bank collapsed in early March. But the deposits of ins utional investors such as other financial ins utions, investment firms, and local authorities are not covered. Fifty municipalities are believed to be nursing losses of at least €500 million.

Greensill’s biggest source of funds, Credit Suisse, has seen its share price plunge by almost a quarter. This is due not only to the fallout from Greensill’s collapse but also the impact of losses at its prime brokerage division caused by the stricken U.S. hedge fund Archegos, which are expected to reach €4 billion. The lender has warned of “considerable uncertainty” regarding the valuation of its supply chain finance fund. More than $5 billion of the roughly $10 billion invested in the fund remains outstanding.

Credit Suisse had assured clients in marketing do ents that the debt in the supply chain fund was “low risk”. In one factsheet, it also said: “The underlying credit risk of the notes is fully insured by highly rated insurance companies.” At the beginning of March, that turned out not to be true. Some clients whose money remains trapped in the fund have threatened to sue.

Greensill’s biggest client, Anglo-Indian steel magnate Sanjeev Gupta, is on the verge of bankruptcy. Gupta’s GFG Alliance reportedly owes Greensill more than €3 billion. It began defaulting on its obligations after Greensill stopped lending to the group at the beginning of March. At the end of March Gupta requested a £170 million emergency loan from the UK government, which was duly rejected. Greensill’s administrator, Grant Thornton, has been unable to verify invoices underpinning some of the loans to Gupta. Companies listed on the do ents denied ever having done business with the metals magnate.

Now the fallout is beginning to splatter the British government, which invited Greensill to participate in its Coronavirus Large Business Interruption Loan Scheme (CLBILS). This is despite the fact the company: a) wasn’t a bank; and b) was quite clearly already in deep financial trouble. Greensill’s participation in CLBILS allowed it to extend even more loans, this time government backed, to Gupta’s empire. Taxpayers will now probably end up holding the bag for those loans.

https://www.nakedcapitalism.com/2021...overnment.html

[boutons_deux]

another one

He Built a $10 Billion Investment Firm. It Fell Apart in Days.

Banks were eager to do business with Bill Hwang and his Archegos Capital Management — until he ran out of money.



“That whole affair is indicative of the loose regulatory environment over the last several years,” said Charles Geisst, a historian of Wall Street.

“Archegos was able to hide its iden y from regulators by leveraging through banks in what has to be the best example of shadow trading.”

Archegos was trading stocks on two continents, and banks could charge sizable fees on the trades they helped arrange.

Goldman later changed course, and in 2020 became a prime broker to the firm

alongside Credit Suisse and Morgan Stanley.

Nomura also worked with him. JPMorgan refused.

Credit Suisse, which had acted too slowly to stanch the damage, announced the possibility of significant losses;

Nomura announced as much as $2 billion in losses.

Goldman finished unwinding its position but did not record a loss, a person familiar with the matter said.

ViacomCBS shares are down more than 50 percent since hitting their peak on March 22.

https://www.nytimes.com/2021/04/03/b...-archegos.html

[Winehole23]

Archegos was mentioned in the article

[Winehole23]

Demand boom on collision course with ocean transport ceiling in International Shipping News 06/04/2021

U.S. containerized imports show no sign of letting up as the second quarter begins. On the contrary: Consumer demand is strengthening in the wake of fiscal stimulus and falling inventories that necessitate even more restocking.

The biggest risk to Q2 container-shipping volume is not demand for goods, it’s transport supply.

Fallout from the Suez Canal accident will constrain vessel and container-equipment availability, leading to longer delays. By the end of this quarter, shoppers in America’s stores could find more bare shelves. Online shoppers could increasingly see the words “out of stock.”

Inventory restocking tailwinds

The positive data on demand keeps piling up. On Thursday, the Ins ute for Supply Management (ISM) Customers’ Inventories Index (SONAR: ISM.MCIN) sank to 29.9 points.

“This reading is the lowest ever reported since the subindex was established in January 1997,” said Timothy Fiore, chairman of the ISM survey committee. “For eight months in a row, [the index] has been at historically low levels.”
...

Bookings are still rising

The nationwide index for inbound cargoes from all countries (SONAR: IOTI.USA) reached its highest-ever level on Wednesday.
The index also tracks bookings seven days into the future. This forward view shows that a fresh all-time high is coming next week.

Suez Canal fallout is coming

The Suez Canal accident is putting more pressure on an already strained global system. The number of ships waiting to transit the canal peaked last Monday, at 367.

About 80-90 ships have transited per day since the Ever Given was refloated, according to Leth Agencies. Prior to the accident, there were 52.7 per day (year to date).

But even as transits surge, more ships keep arriving. As of Saturday, there were still 156 ships at anchor awaiting passage through the Suez Canal. That’s about three times as many as normal.
...
Anders Schulze, Flexport’s global head of ocean freight, predicted that the Suez Canal accident would lead to “a capacity reduction across the board, both in terms of vessel capacity and [container] equipment. There will be a domino effect in terms of vessels and equipment getting back to Asia.”

The disruption at the Suez Canal and congestion at European ports will limit the number of empty containers transported back to Asia. This, in turn, will reduce the number of empty containers available to stuff with Chinese exports bound for the U.S. on trans-Pacific routes.

“The equipment situation was already somewhat critical,” said Schulze. “We were just seeing a light at the end of the tunnel with equipment availability and now this curveball will prolong the situation.”

Further compounding challenges for shippers, at least one carrier — Maersk — has temporarily halted short-term bookings in the wake of the Suez Canal accident. As of Friday, Maersk’s short-term bookings from Asia to both North Europe and North America remained suspended until further noticeAdd it all up — rising consumer demand, very low inventories, a halt to some bookings, voyage delays, vessel and container capacity curbed by Suez Canal fallout — and it’s a recipe for more bare shelves at American stores.

https://www. enicshippingnews.com...sport-ceiling/

[boutons_deux]

CAIRO—Suez Canal authorities said Saturday they have cleared the massive traffic backlog

that resulted when a giant container ship got stuck and blocked the important waterway, disrupting global trade. ...

Leth Agencies, a ship-services provider in the canal, said

527 vessels had cleared the waterway since March 29.2 days ago

https://www.wsj.com/articles/suez-canal-backlog-clears-and-maritime-traffic-returns-to-normal-11617470288#:~:text=CAIRO%E2%80%94Suez%20Canal%20a uthorities%20said,important%20waterway%2C%20disrup ting%20global%20trade.&text=Leth%20Agencies%2C%20a %20ship%2Dservices,the%20waterway%20since%20March% 2029.

[Winehole23]

CAIRO—Suez Canal authorities said Saturday they have cleared the massive traffic backlog

that resulted when a giant container ship got stuck and blocked the important waterway, disrupting global trade. ...

Leth Agencies, a ship-services provider in the canal, said

527 vessels had cleared the waterway since March 29.2 days ago

https://www.wsj.com/articles/suez-canal-backlog-clears-and-maritime-traffic-returns-to-normal-11617470288#:~:text=CAIRO%E2%80%94Suez%20Canal%20a uthorities%20said,important%20waterway%2C%20disrup ting%20global%20trade.&text=Leth%20Agencies%2C%20a %20ship%2Dservices,the%20waterway%20since%20March% 2029.

"Suez Canal authorities say for attribution to the NYT."

I wonder what accounts for the discrepancy between NYT and the enic Shipping News.

[RandomGuy]

British nonbank skirts financial fitness tests, receives emergency COVID dosh for banks.

https://www.nakedcapitalism.com/2021...overnment.html

What? Tories ed up something?

NO WAY.

[boutons_deux]

"Suez Canal authorities say for attribution to the NYT."

I wonder what accounts for the discrepancy between NYT and the enic Shipping News.

I have no idea but search

"suez canal backlog cleared"

[Winehole23]

I have no idea but search

"suez canal backlog cleared"

Suez Canal authorities weren't exactly the most honest spokemen on the front end of this fracaso, did they suddenly regain credibility because the nyt printed their quote?

[Marius Titulescu]

Suez Canal authorities weren't exactly the most honest spokemen on the front end of this fracaso, did they suddenly regain credibility because the nyt printed their quote?

Good point. I wouldn't trust them more than the companies involved.
__________________________________
Marius Logistics

[Winehole23]

https://www.facebook.com/Mariuslogisticsllc/