In today’s email:

• Spring has sprung

• Another bank has failed

• TikTok gets banned

• Bitcoin’s price is shooting up

• Keep up with everything going on around the world

EDITOR'S RAMBLE 🗣

Yesterday was the first day of spring. 🌸 

For me, it’s really significant because the first day of spring (the ‘vernal equinox’) is also the Persian New Year or, as we call it, Nowruz.

For Iranians like myself (and some Afghans, Kurds, Tajiks and Azerbaijanis) it’s a big deal.

It’s a really cool festival with loads of imagery and meaning. Nowruz literally translates as ‘new day’ as spring represents a new beginning.

The celebration includes jumping over fires, painting eggs, giving gifts - a bunch of interesting things.

I never felt it got as much spotlight as it should…

But us Nowruz-celebrators have finally been validated with the ultimate form of acceptance: a Disney video presented by Mickey Mouse about Nowruz!

I’m only half joking tbh - Mickey does a good job at explaining Nowruz, so if you’re interested, check it out.

Happy Nowruz - welcome to spring!

- Idin

FEATURED REPORT 📰

💸 No credit for Credit Suisse

What’s going on here?

UBS (the largest bank in Switzerland) bought Credit Suisse (another huge Swiss bank) for around £2.6bn on Sunday as part of a rescue deal backed by the Swiss government.

Why did this happen?

Another week, another story about a failing bank, eh?

Credit Suisse was in a terrible position in terms of its finances and reputation for a bunch of different reasons which go back many years (a full timeline of misfortunes can be read here).

All these have been killing the confidence of the bank’s customers who have been withdrawing their money - and fast. It’s reported that US$10bn per day has been withdrawn (which, as we learnt from the Silicon Valley Bank situation, is not a good thing for banks).

Here are two examples of things that have contributed to the bank’s poor position:

1. In 2021, a hedge fund called Archegos Capital borrowed money from Credit Suisse (and other banks) to buy stocks, but the stocks went down in value, and Archegos couldn't pay back the money it borrowed. So Credit Suisse had to sell the stocks it held as collateral, meaning it lost US$5.5bn.

2. Also in 2021, Credit Suisse managed funds that invested in a company called Greensill, which lent money to other companies. Greensill went bankrupt, and the funds that Credit Suisse managed couldn't get their money back, so Credit Suisse lost a bunch more money (it’s been trying to recover US$10bn of funds linked to this collapse).

One positive of the deal

✅ The acquisition probably prevented a global banking crisis. An implosion of Credit Suisse would have had had “incalculable consequences for the country and the international financial system” according to Alain Berset, the Swiss President.

One negative of the deal

❌ Some critics say that now these two huge banks have merged, it’s just too much power in the hands of one bank - UBS - which could be dangerous.

One thing to note

✂️ UBS will impose its own strategy at Credit Suisse. One that that’s already set to happen is the ‘downsizing’ Credit Suisse’s investment banking division meaning loads of bankers will lose their jobs.

Is this anything to do with the Silicon Valley Bank collapse?

Not directly, but the global banking system is complex and interconnected. It heavily relies on customers having trust in the banks.

A financial crisis in one bank or region can have spillover effects on other banks and regions. So while there is no known direct link between the Credit Suisse and Silicon Valley Bank collapses, it’s not impossible that one could have influenced the other by damaging customer confidence.

Why should law firms care?

Lawyers were needed to deal with the acquisition.

According to The Lawyer, the Swiss firm Homburger advised Credit Suisse. The bank was also advised by Walder Wyss (another Swiss firm) and Sullivan & Cromwell (a US firm).

UBS was advised by US firm Cleary Gottlieb Steen & Hamilton and Freshfields (a UK Magic Circle firm).

It was an incredibly complex deal given the scale and the timings involved and would have needed legal advice in the areas of corporate, banking regulations, boardroom matters, competition law and external communications.

A BIT OF FUN 😄

🤩 It’s a question of perspective

IN OTHER NEWS 🗞

• 📵 UK government ministers can no longer use TikTok on their work devices: There are security concerns about sensitive data being accessed by the Chinese government. The Chinese-owned app denies handing users' data to the Chinese government. The US and EU have already barred the app from official devices.

• 🛍️ John Lewis may sell a minority stake to raise up to £2bn for tech investments: The department store is currently fully owned by staff and profits are shared. But because of tougher trading conditions, the company is considering changing its employee-owned business structure. If the plan goes ahead, the mutual ownership structure will not be removed and staff will still retain majority control.

• 💰 Bitcoin's price has risen to nearly US$28,000, setting a new all-time high since June 2022: Bitcoin’s price has been going up because of increasing demand from investors who see it as a safe store of money away from the crumbling banks (because it is not controlled by any government or bank). At least someone’s winning from the banks failing!

AROUND THE WEB 🌐

• 🌍️ Global: In today’s global chaos, it can be impossible to keep up with international news. If you don’t have time to read The Economist, NYT, and Washington Post before heading to work, check out International Intrigue.*

• 🖋️ Vocab: If you want to make your writing very good superb, this site gives you alternatives to stop using the word ‘very’ so much (it’ll even help you for law applications).

• 💻️ Tech: If you’ve ever wanted to look inside a tech company like Facebook, Google or Microsoft to see what the CEOs are talking about, this Twitter account is for you. (shoutout to Vitoria for sending this one in - if you have suggestions for the newsletter, just hit reply).

Credit: r/internetisbeautiful

* This is an affiliate link. It's free to join for you and if you sign up through us, we will receive a small commission.

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• 📕Commercial awareness journal: Check out this journal that we've created alongside the team from The Lawyer Spot. It gives your a simple three-step structure to improve your commercial awareness in a high-quality physical notebook.

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