Bond exchange-traded funds have exploded in size in the last few years. The big ticket trades in them are getting bigger too.

Exchange-traded funds were originally launched as a vehicle for stocks, and they've been attracting assets at a fast clip in recent years. The combined assets of US ETFs stood at $2.7 trillion in February, according to the Investment Company Institute, of which $457.4 billion was in bond ETFs. 

A growing chunk of the trading in these bond ETFs is now in large sizes, with the percentage of bond ETF block trades doubling over the past six years. 

Close to $1 in every $4 of bond ETFs traded part of a block trade, according to Credit Suisse. While blocks are commonly defined as those exceeding 10,000 shares or $200,000 in total value, the average bond ETFs block trade was $812,000 per trade in 2016, and $852,000 in the first two months of 2017.

Perhaps unsurprisingly, fixed income is also leading growth in block trades larger than 100,000 shares, which have seen their share climb seven percentage points over the past seven years to 17%. Bond funds currently account for about 40% of the large trades of more than 100,000 shares, up from less than 10% in 2010, Credit Suisse data show.

As an extension of that, 17 of the 20 ETFs most frequently traded in blocks are bond-related. The explanation offered by Credit Suisse is that the bond market is less transparent, which hampers the efforts of traders who use computer-based trading models to transact. As a result, the securities are traded in larger chunks.

Credit Suisse also cites the adoption of fixed income funds by institutional investors, whose adoption of ETFs in general has surged. The popularity of bond ETFs specifically has at least partially stemmed from a prolonged period of low interest rates.

By boasting attractive yields, bond ETFs have been used by investors as an alternative to investments such as money markets funds, which can offer lower returns.

Further, while liquidity in the cash market has gotten tight, ETFs provide investors a handy way to easily move in and out. Bond funds are also used by firms to smooth out holdings in separately managed accounts, according to Credit Suisse.

Block trading in ETFs across all asset classes totaled more than $3 trillion in 2016 for the third straight year, according to the firm, which projects similar levels for full-year 2017.

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LONDON — Credit Suisse's 40% bonus cut for senior executives is unlikely to save the bank from a confrontation with shareholders at a general meeting on Friday.

Members on the executive board said they would slash performance-based rewards by almost half after shareholders objected earlier this month to high pay in a year of losses for the bank.

But it has not been enough to win over all shareholders. 

Advisory group Glass Lewis recommended shareholders vote to reject the executives' pay plan, calling it “wholly inappropriate given the loss suffered by shareholders in the last two fiscal years.”

In an interview with the Financial Times, Credit Suisse Chairman Urs Rohner, said the anti-bonus reaction "was more than I expected, and particularly among UK and professional or institutional investors and proxy advisers.” 

He said he would "explain what we did and we are confident that our shareholders understand why we took the decisions we did.”

Credit Suisse posted a loss of 2.35 billion Swiss francs for the last three months of 2016, a bigger hit than the 2.07 billion francs estimated by seven analysts surveyed by Bloomberg.

The bank must pay $5.3 billion to settle a US Department of Justice investigation into the behaviour of its residential mortgages division leading up to the 2008 financial crisis, pushing the lender to a loss for the year.

The bonus cuts saw Credit Suisse CEO Tidjane Thiam's 2016 compensation reduced by CHF4.67 million to a total of CHF10.24 million. Thiam has led Credit Suisse into a period of deep restructuring in an attempt to rethink the business model in an environment of low interest rates, low economic growth and increased regulation.

Thiam has tried to steer away from the capital-intensive markets business towards providing more services for high-net worth individuals. 

Here is how the shares have performed over the past 12 months:

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LONDON — Credit Suisse on Wednesday said it would raise around CHF4 billion (£3.1 billion, $4 billion) by offering new shares to investors. It is halting plans to list part of its Swiss unit on the stock exchange.

Switzerland's second-largest bank said in a statement on Wednesday that it has "decided not to pursue a partial initial public offering of our Swiss banking subsidiary Credit Suisse (Schweiz) AG, thus retaining full ownership of a historically stable income stream in our home market of Switzerland and avoiding complexity in the business structure and activities of a key division of the Group."

The move allows the lender to strengthen its capital ratio while maintaining control of a profitable unit. At the same time, Credit Suisse's share price has recovered from lows hit last year, making the offer of fresh equity more attractive.

"Through the proposed share capital increase, Credit Suisse Group AG intends to strengthen its Common Equity Tier 1 (CET1) capital and gain greater financial flexibility for the implementation of its strategic objectives," the bank said.

A bank's capital ratio is a measure of its financial strength and ability to weather losses.

"We expect the capital increase will strengthen our pro forma look-through CET1 ratio to approximately 13.4% and our pro forma look-through tier 1 leverage ratio to approximately 5.1%, based on our end-1Q17 risk-weighted assets and leverage exposures," Credit Suisse said.

Raising capital to deal with increased global uncertainty and tougher regulations has been part of CEO Tidjane Thiam's plan since he took over in 2015. He has overhauled the bank's business model, steering away from the capital-intensive markets business towards providing more services for high-net-worth individuals.

In an interview with Bloomberg News last year, Thiam said: "You cannot see the future, that is a futile activity. What you can do is think through how you’re going to cope with a range of futures and then you define a risk appetite – which is what probably of death are you comfortable with."

"In life, you should only worry about the bad outcomes. If you raise capital and you’re wrong, it’s ok. If you don’t raise capital and you’re wrong, you die," he said.

Here's the chart showing Credit Suisse's recent share price recovery:At the end of last year, Credit Suisse was hit with a $5.3 billion bill to settle a US Department of Justice investigation into the behaviour of its residential mortgages division leading up to the 2008 financial crisis, pushing the lender to a loss for the year.

In the quarter the settlement was announced, Credit Suisse reported a capital ratio of 11.6%, down from 12.5% before the DOJ settlement but higher than the 10.2% ratio when the bank’s new strategy began in October 2015.

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McDonald's had a killer first quarter, and that has much of Wall Street bullish on the company's stock. 

McDonald's reported first quarter earnings of $1.47 on Tuesday, above the Wall Street consensus of $1.34. The news has pushed the firm's stock to new heights. 

But a duo of equity analysts at Credit Suisse think the best is yet to come for McDonald's stock price.

"After showing negligible EPS growth from 2011-16, CEO Easterbrook and team are starting to unlock pent-up earnings power of brand McDonald’s," the bank said in a note out to clients on Wednesday. 

According to Credit Suisse, McDonald's impressive first quarter demonstrates that the burger maker can deliver healthy earnings per share growth moving forward. In response, the bank raised their expectations for EPS for 2017/2018 to $6.32/$6.67 from its original $6.08/$6.54 estimate. 

"While this quarter does not mean MCD is suddenly a growth company, the result shows that MCD can achieve healthy EBIT and EPS growth against the headwind of refranchising," the bank said. 

McDonald's impressive same-store sales in Q1 is another reason why Credit Suisse is bullish on the stock.

"MCD's US SSS outperformed fast food peers by 210bps in 1Q, a sharp improvement from 300bps underperformance in 4Q16," the bank said. 

Global sales at stores open for at least one year rose by 4%, crushing the consensus estimate for an increase of 1.3%.

According to McDonald's, all-day breakfast and new sizes for the chain's signature Big Mac played a key role in boosting sales. 

Credit Suisse is lovin' the stock. The bank has raised its price target for McDonald's stock from its original target of $137 to $157, above the current market price of $141 per share.

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• Marks & Spencer could do deal with Ocado for online groceries;
• Amazon and Waitrose could be hurdles to a deal, Credit Suisse says;
• Analysts think Ocado could make up to £4 million from a deal, impact for M&S limited.

Marks & Spencer could do a deal with Ocado for online food delivery, according to reports.

Marks & Spencer announced last week that it is planning to launch an online grocery service this autumn.The Telegraph reported on Sunday that the department store and food retailer is considering partnering with online grocer Ocado to handle the fulfillment of the orders.

The tie-up makes sense (I flagged it as a possibility when M&S first announced its plans).

M&S has a strong own-brand food business but has never done online groceries before and has struggled with online delivery in the past. Ocado, meanwhile, is a pioneer of online groceries in the UK and has the logistical know-how to pull it off. It has done similar deals with Morrisons and Waitrose in the past.

Credit Suisse said in a note published on Tuesday that it believes the most likely deal would see M&S products stocked on Ocado's website, rather than have Ocado provide the white label plumbing for a new M&S Food website.

"M&S's range is too narrow and its basket size too small to offer a credible standalone online grocery service," said analyst Stewart McGuire in a note.

However, Bernstein believes that an "in-store picking" model is more likely. Rather than having all of M&S' food stock stored in Ocado's central warehouse to be distributed as part of bigger orders, an "in-store picking" model allows M&S to pick products for home delivery from its own stores, using Ocado's technology.

Bernstein's Bruno Monteyne said in a note on Tuesday: "Typically M&S has customers shop smaller baskets, serving customers in the 'something-for-tonight' or 'top-up' shopping missions rather than the 'main shop.'

"The economics of central fulfilment are hugely in favour of bigger baskets. Hence, it's more likely that a solution would be in store pick for M&S."

Amazon & Waitrose could stand in the way

Credit Suisse flagged two major obstacles for any deal being done between the two: Amazon and Waitrose.

On the Amazon front, Credit Suisse said that the online retail Goliath could be tempted to make an attractive offer to get M&S' high-end food onto its platform.

"The potential to access a loyal and lucrative segment of the market may provide enough of a draw to offer lucrative terms to M&S," said McGuire. But he adds that the fact M&S has already pulled its clothing from Amazon makes a deal less likely.

McGuire also warned that Ocado's contract with Waitrose could make a deal with M&S difficult. Under the terms of the deal, 70% of all non-own brand products sold on Ocado have to come from Waitrose. If you count M&S as a brand, this would make a deal impossible as Waitrose can't and won't stock its competitor's products.

McGuire said: "It is unclear whether M&S product would be considered 'branded', thereby preventing their listing, but the ability to renegotiate the contract is always available."

What does it mean for both companies?

If a deal does go through, what would it mean for M&S and Ocado's businesses?

Credit Suisse said that for M&S "it might be better for sentiment than its financials as we would assume 25-50% of online sales would be cannibalised from stores, and the split with Ocado would reduce margins below 33% retail gross margin."

Meanwhile, Bernstein forecasted that Ocado could make £2-4 million in profit over the medium term from a deal with M&S. However, Monteyne added: "This could be significantly lower if there was a competitive bid process with other players vying to provide an in-store pick solution for M&S."

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Dunkin' Brands, the parent company behind Dunkin' Donuts and Baskin-Robbins Ice Cream, reported earnings on Thursday that were in line with Wall Street's expectations. 

In a note out to clients on Friday, a duo of equity analysts at Credit Suisse said Dunkin' Brands reported earnings of $0.54 per share and flat same-store-sales (SSS.) 

Dunkin' Brands' lackluster SSS results didn't spook Credit Suisse, and the bank is still bullish on the donut and coffee chain's stock. It has a price target of $61 per share for Dunkin', above the firm's current market price of $56.56 per share.

The bank identified expected improvements in SSS later in the year as one reason for investors to stay bullish on the stock.

"On Dunkin' US SSS, we maintain 2Q17E at +2% but lower our 3Q/4Q to +1.5% (from +2.0%) to reflect the lap of Cold Brew on Aug. 1 and limited visibility into impact of expanded menu simplification test," the bank said. 

In February Dunkin' announced it would begin tests on a simplified menu at 300 of its stores to increase speed and efficiency and, in turn, improve sales.

Credit Suisse noted two other reasons to stay optimistic. They are as follows:

1. Buybacks."Potential re-leverage event in coming qtrs. – we forecast ~$800mm of buybacks in 2017-18, ~15% of market cap (assumes DNKN moves to ~5.4x leverage, near high end of 4.5-5.5x target range and up from ~4.6x today)"
2. Taxes. The firm has "favorable exposure to potential corporate tax reform (~38% tax rate vs. ~32% for avg. restaurant chain)."

 Click here for a real-time Dunkin' Brands Group chart. 

SEE ALSO: CREDIT SUISSE: McDonald's has unlocked 'pent-up earnings power'

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Credit Suisse has promoted Andy Lipsky and David Wah to co-heads of investment banking and capital markets in the Americas, according to an internal memo seen by Reuters and confirmed by a spokesman from Credit Suisse.

Both of the appointees previously held senior level roles at Credit Suisse. Lipsky was head of global industrials and Wah was head of global technology.

Lipsky joined Credit Suisse in 1997 as a vice president in the mergers and acquisitions group.

He has held a variety of other roles at Credit Suisse, including Americas head of M&A, head of diversified industrials and services, head of takeover defense in Europe, head of European capital goods, and head of retail and consumer.

Wah joined Credit Suisse in 1992 as an associate in the industrials group. He has been a part of the technology group since 1996.

Wah has been global head of technology investment banking since 2005. He has also been global co-head of Credit Suisse's technology, media and telecom group since 2010.

According to the memo, "Andy and David’s appointment will better support the management of (investment banking and capital markets) as a standalone division."

Lipsky and Wah will continue in their capacities as global group heads. (Reporting by Carl O'Donnell in New York; Editing by Leslie Adler)

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Disney has been heavily investing in its theme parks with projects such as the upcoming "Pandora: World of Avatar" attraction.

Once these projects are complete, analysts believe the returns will be substantial.

"We believe this growth potential in Parks cashflow is often overlooked by investors," the note said.

Credit Suisse analysts estimate that Disney's theme park cashflow could triple — reaching $2.7 billion —  but only if its investment to sales ratio can return to previous levels.

"With construction of two Star Wars lands, a Toy Story Land and two new cruise ships underway, [investment costs are] unlikely to change in the next two years," the Credit Suisse analysts said, "but at some point it seems logical to expect capital intensity to normalize."

Last year, theme park capital expenditures — the cost of upgrades to physical assets like buildings and equipment — cost Disney a quarter of what the parks were making in sales. That 25% rate was up from 16% from 2004-2016.

And while the new "World of Avatar" attraction cost Disney $500 million, Credit Suisse believes it will be money well spent.

"The centerpiece is a 3D augmented reality flying simulator called Flight of Passage, which we believe will become the 'go-to' attraction at Walt Disney World, further enhancing attendee demand and Disney's ability to drive up per cap spending."

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About a quarter of US malls will most likely close within the next five years, according to a new prediction from Credit Suisse.

In a research note published Tuesday, the bank estimated that 20% to 25% of the nation's 1,100 shopping malls — or roughly 220 to 275 shopping centers — would shut down by 2022.

Credit Suisse cited mass store closings, the rise of e-commerce, and the growing popularity of off-price chains — which tend to be located outside shopping malls — as reasons for the potential mall closings.

About 3,600 store closings have been announced this year.

Credit Suisse estimates that about 8,640 stores will ultimately close by December.

The firm also estimates that e-commerce will grow from 17% of apparel sales today to 37% of apparel sales by 2030.

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General Electric has not had a great year so far, but it might be time for a turnaround. Shares of GE have fallen 12.7% so far this year due in part to a low opinion of the company by many analysts.

But research analysts at Credit Suisse have a rosier view of GE's prospects. According to a research note released Thursday, the bears' opinions are "overstated" and have swung the stock into an attractive buying position.

"We think that GE is not a ‘broken company’," the analysts wrote, "although it might be somewhat misunderstood." Credit Suisse has a price target of $34 per share, which represents about a 23% jump from its current price.

Overly pessimistic analysts aren't the only reason GE is attractive right now, the analysts said. Equipment orders have been weak over the last 18 months, but because of a historically longer order cycle, a recent upswing in orders at competing companies means GE could see more orders in the next 9 months, according to Credit Suisse.

In 2015, GE acquired a power and grid business from Alstrom, it's largest-ever industrial acquisition. Profits from that acquisition are starting to grow, in addition to major new product launches which raise the potential for higher profit margins, Credit Suisse said.

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Hedge funds like to make money and can be quick to leave companies that aren't performing well.

Credit Suisse compiled a list of stocks that hedge funds are giving up on, which it calls "fading stars." The following list, released in a note to investors, points out the stocks with the biggest declines in the number of large cap hedge funds holding their shares in Q4 2016.

Only four of the companies has posted a declining share price so far this year. But if a large number of hedge funds are announcing skepticism by selling their shares, their futures may not be as bright. For these companies, this could be an indication of poor future returns.

Hedge funds are certainly not perfect at seeing the future, and their movements should be taken with a grain of salt. For those looking to lighten their portfolio, however, these stocks might represent a good place to start.

Each of the following shares is listed with its sector, year-to-date stock price change, the number of large-cap funds still holding shares, and the number of funds that dropped their ownership in the fourth quarter of 2016.

Exxon Mobil Corp

Industry: Energy

Year to date performance: -11.12%

Number of Funds Invested: 201

Number of Funds that dropped since 3Q: 10

Click here to follow the stock price live...

Tyson Foods

Industry: Food and Beverage

Year to date performance: -3.27%

Number of Funds Invested: 67

Number of Funds that dropped since 3Q: 10

Click here to follow the stock price live...

Monsanto Co

Industry: Materials

Year to date performance: +11.8%

Number of Funds Invested: 63

Number of Funds that dropped since 3Q: 10

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A popular bike-share program in New York City has had its first fatality.

A 36-year-old investment banker who was riding a Citi Bike was killed after he apparently fell under a charter bus, The New York Times reports.

Dan Hanegby of Brooklyn Heights was riding one of the bikes in Manhattan's Chelsea neighborhood in what was reported to be an accident.

Hanegby "swerved to go around a parked van, struck a bus next to him that was traveling in the same direction, tumbled off the bicycle and fell under the bus’s rear tires," The Times reported, citing police.

Hanegby was a director in investment banking at Credit Suisse.

This is the first fatality for Citi Bike in its four years operating in the city, according to a company representative. Citi Bike has had more than 43 million trips in the city since the program began.

New York's cyclists have long asked for more protections and complained of insufficient lanes to ride in the city. Through April this year, four bikers in the city have been killed, according to city data.

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• Swiss central bank out with 2017 financial stability report.
• UBS, Credit Suisse need credible insolvency plans.
• Banks on track to meet Swiss too-big-to-fail capital rules. 

ZURICH, June 15 (Reuters) - Switzerland's central bank on Thursday told the two big Swiss banks, UBS and Credit Suisse, they still need to draft credible plans for a potential insolvency, as part of the country's efforts to prepare for a banking crisis.

After the financial crisis in which UBS suffered billions of dollars in losses and took a government bailout, Switzerland introduced new regulations designed to protect the economy from a possible banking collapse.

The Swiss National Bank (SNB), which helps oversee the stability of Switzerland's financial system, said the two big banks are on track to meet the new capital requirements but more work was needed in planning for a potential bankruptcy.

"In view of the significance of resolution as a means of resolving the 'too big to fail' issue in Switzerland, it is essential that further progress be made in drawing up robust resolution plans," the SNB wrote in its annual financial stability report.

The two big banks, whose combined balance sheets are more than two-and-a-half times the size of Switzerland's economy, have already set up Swiss subsidiaries that house the functions crucial to Switzerland.

However, they still need to demonstrate how they would be able to maintain these systemically important services when faced with impending insolvency, the SNB said.

They will also need to bolster their "gone-concern" capital, applicable in situations where a bank must be wound down following insolvency.

UBS and Credit Suisse are on track to meet updated too-big-to-fail (TBTF) capital requirements by end-2019, the SNB said, though it cautioned they still need to improve their total loss-absorbing capacity for their leverage ratios.

The TBTF rules include a headline requirement for UBS and Credit Suisse to hold core capital worth 5 percent of total assets, known as the leverage ratio. At least 3.5 percent of the leverage ratio is to be made up of high-quality common equity tier 1 (CET1) capital.

They will also need to meet a common equity Tier 1 (CET1) ratio of 10 percent. The CET1 ratio of capital to risk-weighted assets is a closely watched measure of balance sheet strength.

After raising about 4 billion Swiss francs ($4.1 billion) this year, Credit Suisse said it would have a CET1 ratio of 13.4 percent and a leverage ratio of 5.1 percent, based on first-quarter reported numbers.

UBS had a CET1 ratio of 14.1 percent at the end of the first quarter and a CET1 leverage ratio of 3.55 percent.

The banks did not immediately respond to a request for comment on the SNB report.

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Amazon swooped in to buy the high-end grocer Whole Foods on Friday, paying $13.7 billion, or $42 a share — a healthy 27% premium on the previous day's closing price.

So what's in it for Amazon?

There are a couple of strategic plays at work for the online retail giant.

For starters, acquiring Whole Foods' 440 US stores — many of them in prime locations — could bolster the network for AmazonFresh, the company's grocery delivery service.

"To ship efficiently groceries to consumers, you need physical distribution (item-picking to put parcels together, click-and-collect points) close to the consumer," analysts at Bernstein wrote in a research note. "Stores are ideally located for that. They won't look like stores in five years' time, but they will be in those locations."

AmazonFresh's rollout has gone slower than expected, according to analysts at Credit Suisse.

The move also makes a lot of sense, given the weapon Amazon unveiled in March: AmazonFresh Pickup.

The service allows customers to order groceries online, then set a time for pickup as soon as 15 minutes after. So far, there are only two locations, both in Seattle, but AmazonFresh Pickup could scale rapidly after Friday's deal.

The move could improve the selection of grocery items for AmazonFresh users, as well as strengthen Amazon's bargaining position with suppliers, according to Credit Suisse.

Buying Whole Foods could also ramp up Amazon's private-label-grocery business, an industry that is growing steadily in the US and other developed markets, Bernstein said. Whole Foods' 365 Everyday Value brand is already popular, and Amazon would be able to expand its footprint.

Bernstein said in the research note that developing a private-label business "is time-consuming."

"This gets Amazon straight up the curve with a credible, albeit upmarket, range," it added.

SEE ALSO: Amazon is buying Whole Foods for $13.7 billion

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Chipotle Mexican Grill shares are one of the biggest losers in the market today.

Shares of the restaurant fell more than 7% on Tuesday. The drop came after the company announced it would be spending more money on marketing as it tries to win back customers.

The chain had a string of incidents involving E. Coli contamination at its restaurants, and its stock has fallen 27.97% over the last three years.

After an earnings call on Monday, the company issued an 8-K, an SEC regulatory document, saying it will be increasing spending on marketing by 0.2-0.3% in the second quarter compared to the first quarter of this year.

"As a result, we expect other operating costs as a percentage of sales for the second quarter to be at or slightly higher than reported for the first quarter,"the filing said.

Credit Suisse updated its estimates for Chipotle after the 8-K was released. "Bottom line, this update should lead to modest downward earnings revisions which will likely put some pressure on the stock today," the bank wrote.

Credit Suisse rates Chipotle as a neutral, with a price target of $425.00 which was about 7.4% lower than the price at the time Credit Suisse revised its price target. Chipotle has since dropped to come about even with the bank's prediction.

Shares of Chipotle are up 13.69% this year, even after Tuesday's declines.

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Half a billion dollars worth of loans to Mozambique are currently unaccounted for and are rumoured to have gone to weapons, according to a report by independent auditor Kroll. The report also criticises main lender Credit Suisse for charging excessive fees as part of the loan agreement, which the bank has denied.

Loans totalling $2 billion were agreed with lenders Credit Suisse and Russian investment bank VBT Capital in 2013 and 2014, to boost Mozambique's fishing industry, and became known as the so-called "tuna bonds."

The report found that $500 million of the total loan is currently unaccounted for  and that the lenders charged over $140 million in "contractor fees," on top of almost $59 million in bank fees. 

"The reporting that Credit Suisse realised $100 million or more in 'arranging' fees is incorrect and misleading," a spokesperson for the bank told Bloomberg. "Banking fees for Credit Suisse totalled $23 million — roughly 2.3% of the total financings and is in line with comparable emerging market financing transactions," they said.

The $2 billion loan went to three companies, ProIndicus, EMATUM and MAM, in order to boost maritime security and the country's fishing industry. It was taken out in secret, and authorities only admitted to the undisclosed borrowing in April 2016. Officials later admitted repayments were unsustainable, causing the International Monetary Fund (IMF) and other donors to halt aid to Mozambique.

Kroll's audit was unable to determine where $500 million of the loan had gone due to "inconsistencies" in the explanations it got from 'Person A' (a senior figure responsible for signing documents on behalf of the three companies), Mozambique's Ministry of Defence and the shipbuilding contractor, the Privinvest Group.

"The main challenge in completing the Independent Audit was the lack of documentation available from the Mozambique Companies," says Kroll's report. In many cases, it goes on, documents were either incomplete, "classified" or otherwise unavailable.

One possible clue comes from a 2015 IMF report, which noted that the government of Mozambique had guaranteed a $850 million bond, issued by EMATUM, for the purchase of tuna fishing boats and maritime security equipment. $500 million, it said, was then incorporated into the national budget and became public debt.

But Mozambique's Ministry of Finance was unable to confirm to Kroll that this was the case. Instead, Person A said the money had been spent on military equipment. Supporting this theory, a draft contract between Privinvest Group and ProIndicus outlined that some of the boats would be fitted with weapons, although this was omitted from the final contract.

However, Privinvest were adamant that no weapons had been provided, and Kroll said ProIndicus had not explained the contract change.

Given that the project was intended to monitor and protect Mozambique's waters, says the report, "it is remarkable that the vessels were not fitted with weapons, as this will undoubtedly restrict the ability of the vessels and their operators to effectively police the Exclusive Economic Zone."

Kroll also said they had been unable to assess whether the boats and equipment provided by Privinvest had been value for money. When comparing Privinvest's invoices and the market price for the boats that were provided, Kroll found a difference of $713 million, which it has been unable to explain.

One anonymous source told Kroll that they had knowingly and unlawfully breached the country's budget laws, by approving the government guarantees for the three companies. They said they had been convinced that this was necessary by officials from Mozambique's security service, SISE. Some of the classified information requested by Kroll is currently being withheld by SISE.

Mismanagement within the three companies — ProIndicus trainees did not have the necessary technical knowledge or clothing, while EMATUM had not secured the necessary land and buildings to establish a coordination centre — further complicated accurate reporting and hindered Kroll's assessment of value for money. Kroll also noted that none of the three companies were fully operational, and had generated "no meaningful revenue."

Without some of the documentation currently being withheld, Kroll says the $500 million will likely remain unexplained.

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Shares of Snap are hitting new lows Tuesday morning, after another bank — this time Morgan Stanley — cut its price target on the stock. 

Snap's fallen to $16.26 in early trading, below its $17 IPO price and a new low.

The losses come as the drumbeat of pessimism from Wall Street grows louder. Several banks, including some of the deal's underwriters of the IPO have cut their price targets on the stock. 

Morgan Stanley lowered its price target on Tuesday from $28 to $16, according to Bloomberg. Morgan Stanley was an underwriter of Snap's IPO. JPMorgan, another of Snap's underwriters, has been bearish on the stock since shortly after the company became public.

The cut comes a day after Credit Suisse recently lowered its price target from $30 to $25.

The slate of downgrades and downward stock price trend comes even as Snap is opening new advertising channels and releasing new features for users. Many of the banks have pointed to what they expect to be a disappointing second quarter earnings report, which is set to be released next month.

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SEE ALSO: Snap sinks below its IPO price for the first time

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LONDON — Britain is "flirting with recession" and could see its economy start to contract within six months, according to a new note from Swiss banking giant Credit Suisse circulated to clients on Wednesday.

Analysts Sonali Punhani, Peter Foley, and Neville Hill argue that while a recession is not hugely likely and does not represent the bank's central scenario, there is as much as a 38% chance that a technical recession could be on the cards.

Britain's economy grew just 0.2% in the first quarter of the year, and most current forecasts are for growth to be around that level in the second quarter as well.

That, Credit Suisse's team says, is a troubling sign.

"Quarterly growth that is only narrowly in positive territory raises the prospect of a technical recession. That is not our central scenario, but the risks are increasing, and the volatile political backdrop and unpredictable Brexit negotiations have increased the uncertainty of our forecasts."

A technical recession occurs when an economy contracts for two consecutive quarters. If the UK's GDP were to shrink 0.1% in both the third and fourth quarters of 2017 that would be considered a technical recession.

However, in the hypothetical (and highly unlikely) scenario that the economy shrunk 1.1% in Q3, grew 0.1% in Q4, and then contracted a further 1% in Q1 of 2018, that would not strictly count as a technical recession.

Credit Suisse was one of the numerous banks to forecast a recession in the aftermath of the vote for Brexit, but acknowledges in its new research that it made errors in its modelling. 

"It is worth noting that we forecasted a recession in the UK in the aftermath of the EU referendum last year. The recession didn’t materialize as consumer spending held up better than expected, albeit only thanks to a massive drop in the saving rate," the analysts write.

However, many of the negatives around the economy that could end up causing a recession persist in "haunting" Britain, they argue. 

Here are Punhani, Foley, and Hill again (emphasis ours):

"The reasons for expecting a recession after the EU referendum continue to haunt the UK economy and the fundamentals have become weaker over the last few months. We expected a recession post the referendum to be driven by a halt in business investment as firms react to the uncertainty triggered by the vote; and a squeeze in consumer spending as a consequence of currency depreciation and higher inflation. These drivers are materializing now (later than we initially expected) and are likely to worsen as political uncertainty continues post the election and at the onset of Brexit negotiations."

Consequently, the chance of a recession is more than a third, they say. That could get even higher in the event that the Bank of England hikes interest rates before the end of the year, although that seems unlikely given Tuesday's inflation figures showing an unexpected fall in how fast the price of goods rose during June.

"We have estimated a number of models that put the chances of a recession in the UK in the next six months in a 25%-38% range," the trio write.

"Importantly, we estimate that a 25 bps hike by the BoE would increase the probability of a recession by around 5%."

Here's that prediction in chart form:

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Credit Suisse has hired Anthony Abenante, a trading technology veteran, to its equities business. 

Anthony Abenante left Instinet, an electronic trading firm, in 2012 after serving as the company's CEO for five years, according to his LinkedIn profile.

He has since provided counsel to a number of financial technology firms including KCG Holdings, the high-frequency trading firm recently acquired by Virtu Financial, and Bloomberg Tradebook. 

Abenante is joining Credit Suisse from Aquiline Capital Partners, a private equity firm, where he helped identify investment opportunities in financial technology. 

"With 28 years of financial technology, trading, and management experience across a number of Equities platforms, Anthony brings with him deep market knowledge and technological expertise that will help to drive our efforts to enhance client innovation across our technology offering," Mike Stewart, Credit Suisse global head of equities said in an internal memo reviewed by Business Insider.

Abenante will be based in New York, according to the memo, and will report directly to Stewart. 

Stewart was hired by the Switzerland-based bank from UBS at the end of the last year to help revive the bank's equities business. The bank's equities trading revenue dipped 22% in Q1, the worst drop among its peers. 

To be sure, things have been tough for the entire industry. According to a report out by Greenwich Associates, the market intelligence provider, the US equity brokerage business has declined by about 40% since 2008.

The bank has historically had one of the biggest equities businesses in the world. It was ranked between 4th and 6th for 2016 for equities sales and trading, according to data from data-analytics company Coalition.

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LONDON — It's Q2 earnings season for Europe's biggest banks.

Over the course of the next week or so, lenders from all across the continent will give investors, clients, and the media an update of how they got on during the first half of 2017.

On Thursday, Lloyds was the first major British lender to report, showing an increase in underlying profits of 8% to £4.49 billion, while statutory profits picked up 4% to £2.54 billion. That included the hit taken from one-off charges, including more than £1 billion in charges related to the misselling of PPI in the past.

However, on Friday morning, things ramped up a little with major lenders from the UK, France, Ireland, and Switzerland (as well as Japan), dropping their latest updates.

Earnings were somewhat mixed, so check out Business Insider's round-up below:

Barclays — Big losses thanks to PPI repayments

Barclays made an attributable loss of £1.4 billion in the second quarter, hit by increased PPI costs and losses resulting from the sale of its Africa unit.

Revenue fell 15% to £5.06 billion, while the bank's cost to income ratio rose to 72%, up from 71% in the same period last year. 

In a statement, CEO Jess Staley said: "Our business is now radically simplified, the restructuring is complete, our capital ratio is within our end-state target range, and while we are also working to put conduct issues behind us, we can now focus on what matters most to our shareholders: improving Group returns."

Barclays' stock has hardly moved on the day, gaining around 0.4%.

BNP Paribas — Revenues and profits decline, but beat expectations

BNP Paribas, France's largest bank, beat forecasts on both the top and bottom line, despite seeing declines in both revenues and profits during the quarter.

Income was roughly €2.4 billion — a fall of 6.4% — but had been forecast by analysts at around €1.9 billion. Revenues fell 3% to €10.9 billion, having been expected to drop to €10.8 billion.

"BNP Paribas again delivered a very good performance this quarter. The revenues of the operating divisions were up thanks to the good business drive and operating expenses were down as a result of the implementation of the transformation plan. The cost of risk is under control and was down significantly," CEO Jean-Laurent Bonnafé said in a statement.

Credit Suisse — Rising profits in line with expectations

Swiss banking giant Credit Suisse reported on Friday that its second-quarter profit rose from a year earlier, as revenues increased slightly.

 The bank posted net revenues of 10.7 billion Swiss francs in the first half of 2017, up 9% year on year. "We are now midway through the execution of our three-year strategic plan and our strategy is working: we are making good progress against our key objectives," CEO Tidjane Thiam said.

Investors reacted positively to the news, and CS' Zurich-traded shares have climbed strongly in early trade.