In the previous life, Lehman Brothers did not submit bankruptcy protection application until September 14th, but in this life it was 2 days earlier.&{}..{}
The emergency acquisition of Merrill Lynch by Bank of America was originally supposed to be announced on the 15th, but was not brought forward.
Of course, Merrill Lynch's situation is not at all easier than that of Lehman Brothers. If no one rescues them, their collapse will be a matter of minutes.
But what is better about Merrill Lynch than Lehman Brothers is that they have one of the best securities trading companies in the world. This capital is a very good benign asset. Whoever gets it will definitely benefit a lot for long-term development.
This is also the most important reason why Bank of America chose to bail out Merrill Lynch instead of bailing out Lehman Brothers.
However, Xiao Qi received a call from Citibank Executive Vice President Jabil on the 13th.
Not long after, Xiao Qi met the most powerful figure in Citibank in the reception room of Fairy Company.
"Mr. Jiepu, you said you can just call if you have anything to do, why do you need to come here in person?" Xiao Qi shook hands with him and said, "But when did you come to Chengdu? Why didn't I hear President Qu talk about it?"
"I just got off the plane." Jeep said with a frosty look on his face, "Qi Shao, I'm here to help you."
"Huh? What do you mean?" Xiao Qi asked in surprise.
"To tell you the truth, Citibank is in a very bad situation right now. It is only one step away from bankruptcy. We have tried every means, but there is no way to save Citibank." Jabil said in a deep voice.
Is Citibank about to collapse?
That’s not right!
In the previous life, although Citibank suffered serious losses, they were able to turn the corner in the end because they had the support of a physical bank and their main deposit and loan business was very stable.
This is even more true in this life. They also received US$4 billion from Tang Mingxiang to purchase shares of Cho Girl. Logically speaking, they shouldn't be so fragile.
Thinking in his mind, Xiao Qi said with a smile: "Mr. Jabil is serious. Citibank's business is spread all over the world. How could it be like this because of subprime debt? You will definitely be able to turn the crisis around."
Jabil shook his head and said sternly: "You don't know, Qi Shao, that Citibank is not only suffering serious losses on subprime debt. Although we are also engaged in bond promotion and trading, our main business is banking, and
It is not a specialized investment bank like them. This loss is indeed not large, accounting for more than 30 billion U.S. dollars, but many of the companies we hold shares have fallen into subprime debt. Adding this loss,
At least they cost more than 100 billion U.S. dollars! And to rescue them, it will cost at least 800 billion U.S. dollars. Where do we have the money?
It would be impossible not to rescue them. Because once this matter is disclosed, everyone will lose confidence in Citibank. If deposit users panic and cause panic runs, Citibank will definitely not be able to sustain it.
ah!"
Xiao Qi nodded when he heard this. He understood what Jip meant.
That's what happened.
If you want to say what commercial investment banks are most afraid of, it is a run!
Usually, the difference between the deposit and loan interest rates of commercial banks is very small. However, loan business is still a big income for commercial banks. In addition to interest, you can also borrow loans to do many things, such as borrowing money as a condition.
Negotiate shares or the distribution of other benefits, etc.
The same goes for investment, each bank has its own investment department.
Where does the money for these investment departments come from?
It must come from deposits. They are not the central bank and cannot print their own banknotes.
So they usually lend out people's deposits or use them for various investments, leaving only a small amount of money in the bank as backup.
In order to prevent commercial banks from overly operating public deposits, maintain asset liquidity, strengthen banks' solvency, and prevent chain commercial bank failures. In the 1920s and 1930s, Western countries established the "deposit reserve system."
Usually, commercial banks are asked to pay 8% of their total bank deposits to the Central Bank, and the Central Bank takes care of it on their behalf, which is also a kind of protection for depositors.
When the financial situation becomes dire, the central bank can also adjust the financial market by raising or lowering the deposit reserve ratio to avoid huge shocks.
But in the 1980s and 1990s, Wall Street invented various financial derivatives, and these financial derivatives made it easier for commercial banks to mobilize funds and easily escaped the supervision of the central bank.
Therefore, the central bank's "statutory deposit reserve system" played an increasingly smaller role in financial regulation. Finally, many Western developed countries such as the United Kingdom, Canada, and Sweden directly reduced the deposit reserve requirement to 0.
But the United States is still wary of Wall Street. Although it has relaxed, it has no intention of completely reducing it to 0. Otherwise, with the collapse of Lehman Brothers, countless investors will suffer even more heavy losses.
This "deposit reserve system" is actually not that secure, because you only hand over about 8% of your deposits. What will happen to the remaining 92% of your savings?
Because of this, if 30% of the depositors of a bank withdraw money together, the bank will collapse.
Even if more than 20% of depositors withdraw money, the bank will definitely fall into a huge crisis and may even fail.
This is commonly known as a run.
The root cause of a run is not how much money is left in a bank, but that people have completely lost confidence in the bank. They are worried that their deposits will be wiped out, so they desperately want to get their deposits back.
If you have confidence in this bank, then even if it holds less than 1% of its funds, there will not be a run on it.
For example, for the six major commercial banks in China, even if they only have 1% of their funds, people will not worry because they know that even if these banks have problems, the state will not ignore them.
Because they believe in the country and its credit, Chinese people believe in state-owned commercial banks.
But there is no such good thing in the United States. Citibank is a private joint-stock bank. Not to mention Citibank, even the Federal Reserve, which prints money, is also a joint-stock company, not state-owned!
The credit of Citibank can only be your own. You cannot rely on anyone else, and it is impossible for others to help them shoulder their responsibilities.
It is also because of this that Citibank is panicking now that it is facing such a big crisis.
At this juncture, Jip rushed to Xiao Qi eagerly, so naturally he came to Xiao Qi for help.
"What do you want me to do?" Xiao Qi asked him.
"I hope Citibank can buy more shares of Dreampad or Dreamstars from Qishao." Jip said: "Dreampad and Dreamstars shares are excellent assets that people dream of! If Citibank can buy these shares of Fairy Company
If we hold shares, it proves that we have strong strength and abundant capital, and people will trust Citibank, and then there will be no run. As long as we are given some more time, Citibank will definitely be able to survive."
He is right. In his previous life, Citigroup managed to survive and developed quite well. It was far less miserable than the five major investment banks.
This is also due to the fact that Citigroup has such a deep foundation. It has been doing business in China as early as the Qing Dynasty. It is the same in other European and American countries. This commercial bank with a history of nearly 200 years will definitely be able to recover as long as it is not killed with a stick.
opportunity.
Looking at Jabil looking so nervous now, Xiao Qi analyzed that it might be because Lehman Brothers collapsed too suddenly, and Citibank had long planned to use Fairy to build its reputation, so it came eagerly.
Shares in Fairy's products are definitely not Citi's only card. People from other factions must also be looking for other ways to save Citibank.
No matter how they fight with each other on weekdays, they also know that with Citibank, they can have power. Once Citibank collapses, they will lose their money and power together, not to mention fighting.
However, whoever finds the best and most effective cards will gain greater benefits during the subsequent reward process.
Since the release of the first Dreampad, Fairy Company has become the darling of the investment market. Countless companies and funds want to invest in Dreampad and Dreamstars, not to mention holding shares. As long as they can have a small share, it is as hard as gold.
Currency not only has generous dividend profits, but also has the function of long-term appreciation and preservation.
Unfortunately, so far, Fairy Company has only sold shares once, and it was not for financing, but to form an alliance to resist pressure from all sides.
As a result, 20% of the shares have not entered the hands of ordinary investors at all, but are only held by a few large companies and super rich people.
When Fairy Company will sell its shares for the second time, how much will be sold, and who will get it, has always been a hot topic among financial investment companies on Wall Street and even around the world.
In this uncertain time, if Citibank announces that it has acquired shares in Dreampad or Dreamstars, it will be a great encouragement for any Citibank customer and will definitely reassure people!
Think about it, there are so many powerful super large companies who want to buy shares of Dreampad and Dreamstars but they can’t, but Citibank can buy them. Doesn’t this mean that I am better than them all?
How could such a powerful company encounter bankruptcy?
There’s no need to worry too much, right? (To be continued...)
ps: I don’t know if brothers can understand what I wrote about the 2008 financial crisis like this. If everyone can understand, then the scholar will be very happy, because the writing is easy to understand, haha.