At the end of February 1995, a piece of news shook the global financial industry - the Bank of Baring, a British bank brand with a history of more than 200 years, went bankrupt!

Affected by the news of the bankruptcy of the Bank of Bahrain, a large number of financial stocks around the world have fallen hard.

For example, Hong Kong's large banks HSBC, Hang Seng and Standard Chartered all plummeted by more than 5%. In one day, the market value of the Hong Kong Stock Exchange alone evaporated more than 100 billion Hong Kong dollars.

Among them, the worst decline is Hang Seng Bank, which has been leading the market performance in recent years. It was originally a bank with a market value of less than one-fifth of HSBC, but in just five years, its market value has been similar to that of HSBC. In five years, HSBC has risen almost 6 times, while Hang Seng has risen 30 times.

Without Hang Seng Bank's impressive performance, HSBC would still be synonymous with Hong Kong's deadliest long-term holdings in value investing. Because, after investing in HSBC in the 70s, it has grown steadily ten times in ten years, and has returned more than 1,000 times in 30 years, and has always been regarded as the big stupid elephant with the largest market value in Hong Kong that is unlikely to bring the opportunity to get rich. But HSBC's long-term returns have left many speculators who believe that the largest blue-chip chips will find it difficult to get rich.

Hang Seng is far more slow than 10 times in 10 years, and the stock price growth of 30 times in 5 years is actually far faster than the growth rate of performance. Because, the performance has only increased more than ten times, but the valuation center of the market has increased. rose more than 30 times, but with the continuous growth of performance, the P/E ratio is still 12 times, far lower than the average P/E ratio in the market.

It is precisely because of this that there have always been investors who are bearish on Hang Seng's stock price. After all, it has risen too much in recent years, so that countless investors regret why they decided to buy Hang Seng Bank after the new venture electronics group controlled Hang Seng Bank!

Countless investors also swore that the Hang Seng pullback would definitely buy. But it's always been more up and down.

Just like Moutai and Tencent in later generations, investors have repeatedly said that Moutai and Tencent are too expensive, the company is a good company, and the stock price correction will definitely be bought. However, countless investors are still hesitant when it comes to a pullback. In the end, I can only watch Moutai and Tencent repeatedly reach new highs, hundreds of times in more than ten years.

The same is true of Hang Seng Bank, which has risen 30 times, and the market has recognized it as a good company. Even if the people who invest are more short-term speculation and less long-term holding.

After the real long-term, it was HSBC, the former major shareholder, and after the holding, before selling to the new venture electronics group, basically did not sell a share of Hang Seng. Therefore, HSBC has made more than 100 times on this investment in Hang Seng Bank. After Hang Seng Bank was controlled by Xinchuang Electronics Group, it rose 30 times.

Another long-term holder is the current major shareholder Xinchuang Electronics Group, which basically did not move after buying Hang Seng. In addition, we will use our own funds and resources to help Hang Seng achieve more room for growth.

In short, Hang Seng Bank has risen more than 3,000 times in less than 30 years. Such an increase is unprecedented in the Hong Kong stock market!

This time the black swan event of the Bank of Bahrain was the most fierce in Hang Seng Fall. On the one hand, it is because Hang Seng has risen too much and made an astonishing number of profits. On the other hand, it is because Hang Seng Bank has business dealings with the Bank of Bahrain!

In order to expand its business in the UK market, Hang Seng has launched a number of business cooperation with the Bank of Baring. This news, which was also regarded as good news last year, stimulated the growth of Hang Seng's stock price by tens of billions of Hong Kong dollars.

But today, it was regarded as a major bearish, causing Hang Seng Bank to fall 7%. Compared with the current market value of Hang Seng Bank of HK$400 billion, the bank that is competing with HSBC for the throne of Hong Kong's largest listed company by market capitalization has only fallen by 7%, which is also the market value of HK$70 billion.

In this regard, the senior management of Hang Seng Bank quickly came out to clarify: "The company's main market ranking, Hong Kong local market ranks first with 45%, Chinese mainland market accounts for 38%, and Japanese market accounts for 8%. The total share of all businesses in the UK market does not exceed 4 billion Hong Kong dollars, accounting for less than 5 thousandths, and it is not entirely carried out in cooperation with the Bank of Bahrain, and the preliminary estimate is that if the loss is generated, it will be about 500 million Hong Kong dollars, even if the worst-case scenario occurs, that is, the amount of all the business is lost, which is estimated to be a loss of 3 billion Hong Kong dollars. In 94 years, the assets of Hang Seng Bank have reached more than 1 trillion Hong Kong dollars, and the net profit is 33 billion yuan. The estimated dividend is about 12 billion, even if the maximum loss is only a month's loss of profit, or a quarter's dividend, which will not have a huge impact on the company. What's more, our largest customer is the parent company Xinchuang Electronics Group, and the parent company's long-term deposits in our bank alone have exceeded 300 billion Hong Kong dollars. ”

Although Hang Seng reacted and quickly explained, it only stopped falling. The market capitalization has fallen back to around HK$340 billion, which is HK$40 billion behind HSBC's current market capitalization of HK$380 billion.

After that, although there will be some investors who will get off the bus, and some depositors will run on billions of Hong Kong dollars. However, relative to Hang Seng's current size, these runs do not cause losses at all.

After watching Hang Seng calm down, some institutional investors secretly bought the bottom, resulting in the market value of Hang Seng Bank remaining above HK$330 billion.

……

The Bank of Bahrain is not the world's top financial institution, but it manages £27 billion in assets, and in '94, it generated a profit of $1.5 billion before taxes and has a core capital of $5.9 billion.

It stands to reason that the bankruptcy of such a financial institution should be preceded by a large number of signs of decay. However, the bankruptcy of the Bank of Bahrain did not foreshadow any warning at all, and even the top management of the Bank of Bahrain seemed speechless.

Because the bankruptcy of the Bank of Bahrain is only because a middle-level trader concealed the truth and frantically increased leverage for financial investment, this kind of desperate speculation, judged the wrong direction, and did not do effective risk hedging, naturally it was a mess of losses. After losing the bet, the top management of the Bank of Bahrain was like a lightning strike - the Bank of Bahrain suffered billions of losses, huge losses, and short-term debts were bound to default. Even if you sell some assets at a discount, it is difficult to solve the sudden huge losses and a series of evil consequences.

To put it simply, the Bank of Bahrain was unable to cash on its debts overnight.

As a large bank established more than 200 years ago and ranked more than 400 in the world, the most important asset is undoubtedly credit. When an ordinary company defaults, it is possible that it will decay rapidly due to a lack of liquidity. What's more, banks rely purely on credit to eat, and if they can't cash their debts, the entire bank will inevitably suffer a run on the liquidation level!

The dishonest old man is not terrible, but the terrible thing is that this old man who is incapable of dealing with debts is actually a bank, which is terrible!

"Mr. Lin, in contrast, the Bank of Bahrain may lose its ability to pay, owing about 270 million pounds to Hang Seng Bank, which may have to be liquidated through bankruptcy and liquidation. "The senior management of the Bank of Bahrain, although a little anxious, still politely explained to many customers.

"Is the Bank of Bahrain really going bankrupt and liquidated?" Lin Qi asked.

"Yes, I don't want to, but who could have predicted such a black swan event?" said the CEO of the Bank of Baring, "but you can rest assured that if you can go bankrupt and restructured, although there is no guarantee that all the bonds will be paid, it is estimated that the loss will not exceed 20%, at least, Hang Seng's debt can get back more than 220 million." Even if we can't pay it, the insurance company will pay for it. ”

"In other words, we will lose 50 million pounds of principal because of this, just because we trust you and deposit a part of our capital in your bank, and we will suffer such an unjustified disaster?" Lin Qi said very annoyed on the phone.

"I'm sorry ......"

"It's too late to say sorry now, as a long-established bank, your risk control is too poor. What's more, gambling on your own is too reckless in the past. Macau's gambling king wrote a book, proposing that he wanted not to lose money and not to gamble. Financial institutions, just as intermediary service providers, will definitely not lose money by taking the part they should take. But it's good that you are not satisfied with making interest rate spreads and commissions, but go directly to speculation, and moreover, it is a high-leverage gamble! Moreover, a middle-level employee can cause such a large amount of losses! It shows that your risk control level is not as good as that of primary school students!" Lin Qi said very politely.

It stands to reason that European banking institutions should be conservative, and the established banks in Europe generally advertise this way.

In fact, no, a large number of traditional European banks have diversified their operations, from deposit and loan business to securities, investment banking business, and insurance business. The key is that European banks generally like to gamble on their own, and operate foreign exchange, commodity futures, stock index futures, equities and various gambling treaties with high leverage. Some banks dare to leverage 100 times, and the contracts held for a long time may be dozens or even hundreds of times the size of their assets.

In terms of boldness, the ostensibly conservative European banking community is even crazier than the American banks, and there is a self-destructive impulse in its bones.

Large institutions in the United States will only go bankrupt due to irresistible factors when they encounter a financial crisis. European banks, on the other hand, may have no warning at all, and a middle-level employee at the bottom is inexplicably more leveraged than the bank's liquidity. The liquidity itself is not enough to pay the debt, and it goes bankrupt in an instant.

Ostensibly, the bank has encountered some crazy speculative employees, causing astronomical losses to the company without the knowledge of the top management. But in fact, it is because of the backward risk control technology of the European banking industry.

The bank has calculated a lot, but it can't be calculated, and its own employees will bring such a big loss to themselves. Compared with the loss that an employee brings to the bank, those who are unable to repay the bank loan are nothing.

No matter how shameless you are, no matter how crazy you are, you can't do this, and you can bankrupt a large bank by yourself!

To put it simply, the problem of Bahrain Bank is essentially that the risk control is not good enough, and the root cause is the poor business level and unreasonable KPI assessment. If there is no reward for employees to gamble, and it is not advocated, then it is natural to eliminate this loss in the roots. However, Bahrain turned a blind eye, looked forward to huge profits, and did not make psychological preparations for huge losses, so it was naturally shocked by huge losses in an instant and wanted to solve the problem through bankruptcy.

.。 m.