You may have heard that the Swiss really threw, well, everyone for a loop yesterday, doing the thing they said they’d never, ever do. Why? Because they could? Or because they’d rather not have to buy any more of an increasingly worthless currency. Either way, everyone’sscrewed.
Deutsche Bank AG suffered about $150 million in losses Thursday after the Swiss National Bank abruptly removed the cap on the Swiss franc’s value, sparking a massive rally, according to a person familiar with the matter. Barclays PLC also racked up tens of millions of dollars in losses, although they totaled less than $100 million, another person said.
Meanwhile, a major U.S. currency broker warned its equity was wiped out, a U.K. retail broker entered insolvency and a New Zealand foreign-exchange trading house collapsed.
Who’s to blame? Not these guys, they’ll tell you.
Tough love Friday from Saxo Bank A/S which, as we report here, has gone back to clients to say any Swiss franc trades it seemed to process on customers’ behalf during a half hour window on Thursday morning have been revised. Clients won’t get the rates they thought they hit on the screen after all. Awkward….
“I think it was a fair way of dealing with it. Clients that lost money can blame us, or they can blame themselves. We have always helped and guided them on their risk management of the Swiss franc and warned of the risk.”
Fallout From Swiss Move Hits Banks, Brokers [WSJ]
Who’s Getting Caught in the Swiss Franc Fallout [WSJ MoneyBeat blog]
Hedge funds, speculators face big losses on Swiss franc rally [Reuters]
Saxo: We Did Warn On Swiss Franc Risks [WSJ MoneyBeat blog]
A Franc Question: What Was the SNB Thinking? [WSJ MoneyBeat blog]