Asia’s richest banker Uday Kotak Monday pointed to Credit Suisse’s garage-sale valuations – a $3-billion takeover of a $600-billion balance sheet – to warn his counterparts about building size without rigorous risk assessment, underscoring the enduring salience of prudence in the global lending industry that has seen rates climb 5 percentage points in the US in about a year.
“Credit Suisse sold to UBS for $3 billion, (a) 60% discount to stock value at Friday closing,” Uday Kotak tweeted. “(About) $600-bn balance sheet sold for $3-bn equity value. (About) $17 bn of AT1 bonds written off. A signal for all bankers and stakeholders – when risk-return matrix is overtaken by obsession with size.”