• Credit Suisse analyst Damien Boey has developed a valuation method for Bitcoin combining two seemingly unique factors.
• Those factors are: the size of the bitcoin network, and the yield spread on BBB rated bonds.
• The Credit Suisse model settles on a fair value that is “almost half” its current price — around $US6,000.

Credit Suisse analyst Damien Boey has developed a valuation method for Bitcoin combining two seemingly unique factors: the size of the bitcoin network, and the yield spread on BBB rated bonds.

Bitcoin slumped below $US10,000 overnight in the wake of the latest market meltdown, but a short time ago prices had rallied back above $US11,000.

The Credit Suisse model settles on a fair value that is “almost half” that — at $US6,000.

To start with, Boey tested the thesis put forward by Fundstrat analyst Thomas Lee in November — that Bitcoin increases in value as more people use the network, similar to a social media giant such as Facebook.

Lee said his model — which is based on the number of Bitcoin users and average transaction value — accounted for around 94% of Bitcoin’s price movements over the past four years.

But Boey raised doubts about the statistical robustness of Lee’s equation. He said the evidence suggests that sometimes Bitcoin’s price leads the number of users, rather than the other way around.

So Boey added an extra feature: He found that Bitcoin prices have a strong negative correlation to BBB credit spreads — the difference between the yield on BBB rated debt US government bonds.

“A 1% widening (narrowing) of BBB credit spreads causes a 100 logarithmic point decrease (increase) in Bitcoin’s value,” Boey said.

“In the extreme, this could imply that leverage has been used to fund Bitcoin investments through time.”

“Alternatively, it could simply mean that Bitcoin’s valuation is highly sensitive to whatever has driven credit spreads over the past few years (e.g., quantitative easing from central banks).”

In view of that, Boey offered a word of warning to Bitcoin investors, noting that there’s significantly more upside risks to credit spreads as global central banks begin to withdraw monetary stimulus.

“Perhaps unwittingly, Bitcoin investors have taken on extremely leveraged positions on credit spread compression,” Boey said.

“We believe they ought to be aware of their underlying exposures.”

Boey said there was a hint of irony in the fact Bitcoin’s mysterious creator — Satoshi Nakamoto — created Bitcoin as an antidote to central-bank controlled monetary systems prone to manipulation.

However, based on Bitcion’s correlation to credit spreads, it appears the quantitative easing programs of global central banks may in fact have served to prop up Bitcoin’s value.

Despite that, Boey said central bankers “seem a little threatened” by Bitcoin, highlighting RBA Governor Lowe’s recent comments calling it a speculative bubble.

If yield spreads widen and regulatory authorities continue to crack down on cryptocurrency usage due to the threats posed by alternative payment systems, then Bitcoin’s price may fall significantly further.

Until then, Boey said Bitcoin represents a trading opportunity if investors can find a way to effectively model the dynamics of the market.

SEE ALSO: Cryptocurrency markets are rebounding after a massive crash

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NOW WATCH: The chief global strategist at Charles Schwab says a bitcoin crash won't infect the rest of the market

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Nearly every global bank is experimenting with blockchain technology as they try to unleash the cost savings and operational efficiencies it promises to deliver. 

Banks are exploring the technology in a number of ways, including through partnerships with fintechs, membership in global consortia, and via the building of their own in-house solutions. 

In this report, BI Intelligence outlines why and in what ways banks are exploring blockchain technology, provides details on three major banks' blockchain efforts based on in-depth interviews, and highlights other notable blockchain-based experiments underway by global banks. It also discusses the likely trends that will emerge in the technology over the next several years, and the factors that will be critical to the success of banks implementing blockchain-based solutions.

Here are some of the key takeaways from the report:

• Most banks are exploring the use of blockchain technology in order to streamline processes and cut costs. However, they are also looking to leverage additional advantages, including increased competitiveness with fintechs, and the ability to use the technology to create new business models. 
• Banks are starting to narrow their focus, and are increasingly honing in on tangible use cases for blockchain technology that solve real problems faced by their businesses. 
• Regulators are taking an increased interest in blockchain technology, and they're working alongside major banks to develop regulatory frameworks. 
• Blockchain-based solutions will start to emerge in different areas of financial services. The most successful solutions will solve specific problems for banks and attract a large enough network to create widespread benefits. 

 In full, the report:

• Outlines banks' experiments with blockchain technology. 
• Details blockchain projects at three major banks — UBS, Credit Suisse, and Banco Santander — based on in-depth interviews. 
• Discusses the likely trends that will emerge in the technology over the next several years.
• Highlights the factors that will be critical to the success of banks implementing blockchain-based solutions.

Interested in getting the full report? Here are two ways to access it:

1. Subscribe to an All-Access pass to BI Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >>Learn More Now
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• Credit Suisse's Sonali Punhani argues that the UK consumer could pose the biggest downside risk to solid growth in 2018.
• "As inflation falls and real income rises, consumers can either increase their consumption or their savings," she writes.
• If consumers decide to save rather than spend, it could be bad news for the broader economy.

LONDON — Britain's consumers pose the biggest downside risk to the country's economy in 2018, the UK economics team at Swiss lender Credit Suisse said in a note circulated this week.

Writing on Wednesday, Sonali Punhani, an economist at the bank, argues that consumer spending — which has been one of the main drivers of the UK's economic growth in the years since the financial crisis — now presents the "biggest risk" to Credit Suisse's higher than consensus forecast for GDP in 2018.

"In 2018 we expect Brexit-related headwinds to domestic demand to abate, and the economy to regain traction on strong global and European growth. We forecast growth of 1.8% in 2018, higher than consensus of 1.4%," Punhani writes.

"The biggest risk to our call of above consensus growth is the consumer."

Having risen above 3% late in 2017, driven higher by the weak pound in the aftermath of the Brexit vote, inflation is now widely expected to fall away fairly rapidly. That is expected to coincide with increasing wages for UK workers.

The combination of the two is likely to see real wages increase for the first time since early 2017, giving Brits more disposable income. What they do with that money could be crucial for the economy in the coming 12 months, Punhani argues.

"As inflation falls and real income rises, consumers can either increase their consumption or their savings. Our central scenario is that they will do the former in part because consumer confidence is improving. But the risk is they do the latter, in which case consumer spending will be subdued and will put downside risks to our growth forecasts."

Britain's savings rate fell sharply in the aftermath of the Brexit, with consumers deciding to keep spending, rather than saving money for a rainy day. This is thought to be at least partially down to the fact that more than half of the country's voting population saw Brexit as a material positive, and therefore saw no reason to alter their behaviour

Now the economic downsides of Brexit are become more real — growth is slowing noticeably for example — it could be that British consumers start to put more money away for a rainy day. This, Punhani argues, would be bad news for the economy as a whole.

Citing the Bank of England's unofficial blog, Bank Underground, Punhani writes (emphasis ours):

"Consumers don’t respond in the the same way to good and bad income surprises. Survey evidence finds that an unanticipated fall in income leads to consumption changes which are significantly larger than those associated with an income rise of the same size. Between 2011 and 2014 the annual NMG survey of households, commissioned by the Bank of England, found that an unexpected increase in income leads to an average rise in spending of just 14 pence for each extra pound (MPC=0.14), whereas spending falls by 64 pence for every pound (MPC=0.64) that household income unexpectedly decreases.

"This could limit the scale of real consumption growth we see when income growth picks up."

To be clear, such a slowdown is not Credit Suisse's base case. The bank believes ultimately that "rising incomes should support consumer spending this year." However, it is certainly something to keep an eye on.

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• Credit Suisse is pulling the plug on the VelocityShares Daily Inverse VIX Short-Term ETN, or XIV, which had bet on lower volatility. 
• The exchange-traded note was popular last year amid the market's unprecedented calm. 
• Credit Suisse is the largest investor in the XIV.

With volatility storming back into the market, Credit Suisse is pulling the plug on a popular investment product that had bet on inactivity. 

The bank said Tuesday that it saw an "irrevocable call notice" on the VelocityShares Daily Inverse VIX Short-Term ETN, or XIV, in which it was the largest investor.

The exchange-traded note is designed to return the inverse performance of CBOE's volatility index, or VIX, which saw its largest increase on record Monday amid a 4% plunge in stocks.

The VIX reflects traders' expectations for rough patches in the stock market, and usually trades in the opposite direction to the S&P 500. As stocks surged to new highs last year, the VIX fell to record lows, benefitting the products designed to rise when it falls. 

In its notice, Credit Suisse said it will no longer issue new units of the exchange-traded notes, and expects that its last day of trading for XIV will be on February 20. The following day, investors will get a cash payment per ETN equal to XIV's value, Credit Suisse said. 

On Monday, the XIV, along with the ProShares Short VIX Short-Term Futures ETF (SVXY) wiped out nearly $3 billion, according to Macro Risk Advisors. Both had profited from the market's calm in 2017.

SEE ALSO: 2 red-hot investment products just blew up, erasing almost $3 billion in minutes

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• Credit Suisse has crunched the numbers and approximated the point at which US 10-year Treasury yields could start to weigh on equity returns.
• The firm argues that higher rates don't hurt stocks until a certain threshold is exceeded, after which point stocks become indifferent, which could lead to equity weakness.

Conventional wisdom suggests that higher interest rates make stocks less attractive. As bonds offer higher yields, equities lose their appeal on a relative-return basis.

Credit Suisse argues that investors shouldn't be worried about this dynamic — at least not yet. But the firm does warn of possible trouble ahead as the Federal Reserve prepares for further interest-rate hikes.

The firm has crunched the numbers and found that stocks have historically increased amid rising rates, as long as the 10-year Treasury yield stays below a specific level. At present time, that turning point is 3.5%, or roughly 60 basis points above current levels.

Put differently, in Credit Suisse's view, all bets are off once the 10-year yield climbs above 3.5%, since that's the point where stocks get indifferent to rate moves, which could open the door to weakness.

The chart below shows the positive performance stocks have enjoyed since 2014 with Treasury yields at 3% or below. As you can see from the two negative bars on the right, the bank is projecting equity losses once yields start to exceed 3.5%.

"Equities respond positively to rising rates until yields hit some threshold," Credit Suisse's chief US equity strategist, Jonathan Golub, wrote in a client note. "Our research shows that from 1991–2014, this threshold was 5–6%, but has declined to 3 1/2% over the past several years."

The chart below goes further toward showing how Credit Suisse has arrived at the 3.5% Treasury yield that it says will prove a point of reckoning for stocks. The firm has drawn a trendline based on past S&P 500 performance on days when interest rates rose, and arrived at 3.5% as its key inflection point.

SEE ALSO: A new part of the market is melting down as panicked investors get another 'wake-up call'

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NOW WATCH: Microsoft President Brad Smith says the US shouldn't get 'too isolationist'

• This Swiss bank executive left his job to start Tend, a blockchain company which sells partial ownership of luxury collectibles.
• Tend uses ethereum to prove partial ownership of valuable assets like collectible cars, wines, and even vineyards.
• The idea is that it will let people in emerging markets access the wealth made through the appreciation of expensive items, without having to own the entire thing.

Marco Abele believes that the next generation of wealthy people won't want to be tethered down to physical objects like cars and houses. 

That's the idea behind Tend, an ethereum blockchain project that will soon let investors buy a portion of a luxury item without owning the entire thing. 

"It's basically democratizing the access to very high value, precious assets, and making them available to a broader audience of the planet," said Abele, who was head of digital at Credit Suisse before leaving to launch Tend in August 2017. "I just find that a very beautiful purpose."

Among the items Tend plans to list: a classic Porsche, a whiskey collection, and two Italian vineyards. 

These items appreciate in value faster than traditional investments like stocks, Abele said. By splitting ownership among a dozen or so people, Tend lowers the barrier of entry to investors who may not be able to afford an entire luxury item. 

"They want to invest money more purposefully," Abele said. "And owning something like a very beautiful car collection or a watch collection has a lot deeper meaning for people than just owning a financial instrument."

Tend, which is headquartered in the crypto-valley of Zug, Switzerland, launched in August 2017 and held an initial coin offering to raise money in February. An alpha product is set to launch to 100 users in April before hitting the Swiss market in the third quarter of 2018.

Many of Tend's investors will be in emerging markets like Seoul, Mumbai, Sao Paolo and Mexico City, "where they work very hard, achieve a certain wealth but cannot afford to own such a beautiful object" in its entirety, Abele said. However, an international product won't be available until the end of 2019. 

Ethereum digitally proves ownership of Tend's material objects

Abele and his team verify the authenticity of all of the assets traded on the platform through third-party auditors, and they work with insurance companies just in case something terrible happens to one of the luxury goods.

Tend uses the ethereum blockchain to tokenize the luxury assets, making it possible for physical goods like classic cars and fine wines to be owned concurrently by multiple people. The same way someone can digitally hold a bitcoin, an investor could hold a certain number of tokens that represent equity in a certain item. 

If Tend ever goes bankrupt, Abele said, there will still be a legally binding contract publicly available on the blockchain which proves partial ownership of the object. 

Though technically owned by a dozen or so people, most of the goods are physically held by the person or party that decides to liquidate their investment on the Tend platform. 

While investors can't necessarily decide what happens to an object, every item listed on Tend comes with an associated experience. Investors in the 1955 Porsche, for example, can use the car for four days of private use, or to take it for a ride on a Porsche racetrack.

But at the end of the day, Tend is about longterm collectibles. You would never drink the precious wines or the whiskey collection, Abele said, because the point of investing is that the value appreciates over time.

Though blockchain didn't exist when the 1955 Porsche came out, Abele says he envision a future where artists and producers put their rare objects on the blockchain from day one, and create a fully traceable history of that item to prove its authenticity for the rest of time. 

SEE ALSO: IBM told investors that it has over 400 blockchain clients — including Walmart, Visa, and Nestlé

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An increasing number of wealth managers are using new technologies to make their operations more efficient and to increase customer satisfaction.

The technologies they are implementing include robotic process automation (RPA), chatbots, machine learning, application programming interfaces (APIs), and explainable AI.

In this report, Business Insider Intelligence analyzes how emerging technologies like RPA and AI are transforming the wealth management industry, on both the front and back end, by increasing efficiency and opening up the space to new demographics. We explain how both incumbents and startups are applying these technologies to different business areas, and how successful they've been at implementation. Additionally, we take a look at the challenges wealth managers are facing as they look to revamp their businesses for the digital age.

Here are some of the key takeaways from the report:

• Startup wealth managers and digitally savvy technology suppliers are bringing emerging technologies to the fore to make wealth management more time- and cost-efficient. These include RPA, machine learning, and AI. Big players in the space are also beginning to wake up to those opportunities.
• The technologies can improve consumer-facing elements of wealth management, like onboarding and customer service, to increase customer satisfaction.
• Machine learning and APIs can help wealth managers improve functions like portfolio management and compliance, and help them better stay on top of regulations, and increase customer satisfaction by offering improved and additional services.
• However, there are some challenges wealth managers are facing when implementing these tools, ranging from a lack of customer trust in emerging technologies to difficulty finding appropriate talent.

 In full, the report:

• Outlines how the wealth management industry is implementing emerging technologies.
• Details which technologies they are using, and what their specific benefits are. 
• Discusses the potential challenges wealth managers are facing when implementing new technologies.
• Highlights what wealth managers need to do to stay relevant in the field.

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• Credit Suisse CEO Tidjane Thiam appeared on a panel in London on Thursday.
• Thiam was asked about his view on the global economy and described his approach as the "anti-Wenger," referencing Arsenal Football Club's manager Arsene Wenger.
• "He forever believes that you can win games with inexperienced 19-year-olds who play in midfield," Thiam said, "but you still have to have a good defence."

LONDON — The CEO of Credit Suisse used Arsenal manager Arsene Wenger to outline his investment philosophy on Thursday — but said he is, in fact, the "anti-Wenger."

Tidjane Thiam, who supports North London football club Arsenal, told the Wall Street Journal's CEO Council in London on Thursday: "I define myself as a paranoid optimist — on simpler terms, the anti-Wenger for those who follow football."

Thiam's point was he is comfortable taking risks but always looks for potential hiccups so he can proactively guard against them. Wenger, on the other hand, is purely an optimist who doesn't plan for anything going wrong and is confounded when things go against him.

"He's the coach of Arsenal and he forever believes that you can win games with inexperienced 19-year-olds who play in midfield — and no defence, and no forward," Thiam said.

"I was on a panel with him in September 2009, the League Manager's Association invited us. I said something like I think you will never win the league again and I got him very angry. It's 2018 — 9 years later — my prediction still holds."

"I said [to Wenger]: the premise of football is to score more goals than you take [sic]," Thiam said. "Because you do not have a defence, you take one or two on average every game so you only win when you score two goals or more. How many times do you score two goals or more in a season? Not enough to win the league. I rest my case."

Wenger has managed Arsenal since 1996, the longest spell in the club's history, and won the Premier League in 1998, 2002, and 2004. However, his form has declined since then and there have been growing protests against him from some Arsenal fans over the last few years. Thiam is a season ticket holder at Arsenal but has not attended a game since 2011 as a form of "silent progress."

Wrestling it back to global economics, Thiam said: "I build a very positive picture of the world economy. Yes, you have all the issues around Syria and Korea and populism in Europe and all that but if you take a long-term perspective I am still very positive — but you still have to have a good defence."

Thiam, who has run Credit Suisse since 2015, said he is "a great believer in the emerging markets story" and bullish on the US.

"The world economy I think is good," he said.

"I look at Asia. If you take personal financial assets of people with more than $1 million, 2006-2016, we've added $26 trillion to the wealth of that group of people. Of that 26, 17 is in emerging markets and 9 in developed markets. That's enormous."

SEE ALSO: Credit Suisse CEO Tidjane Thiam made £9.6 million in his first full year on the job

DON'T MISS: Everything you need to know about Tidjane Thiam, Credit Suisse's new CEO

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Nearly every global bank is experimenting with blockchain technology as they try to unleash the cost savings and operational efficiencies it promises to deliver. 

Banks are exploring the technology in a number of ways, including through partnerships with fintechs, membership in global consortia, and via the building of their own in-house solutions. 

In this report, Business Insider Intelligence outlines why and in what ways banks are exploring blockchain technology, provides details on three major banks' blockchain efforts based on in-depth interviews, and highlights other notable blockchain-based experiments underway by global banks. It also discusses the likely trends that will emerge in the technology over the next several years, and the factors that will be critical to the success of banks implementing blockchain-based solutions.

Here are some of the key takeaways from the report:

• Most banks are exploring the use of blockchain technology in order to streamline processes and cut costs. However, they are also looking to leverage additional advantages, including increased competitiveness with fintechs, and the ability to use the technology to create new business models. 
• Banks are starting to narrow their focus, and are increasingly honing in on tangible use cases for blockchain technology that solve real problems faced by their businesses. 
• Regulators are taking an increased interest in blockchain technology, and they're working alongside major banks to develop regulatory frameworks. 
• Blockchain-based solutions will start to emerge in different areas of financial services. The most successful solutions will solve specific problems for banks and attract a large enough network to create widespread benefits. 

 In full, the report:

• Outlines banks' experiments with blockchain technology. 
• Details blockchain projects at three major banks — UBS, Credit Suisse, and Banco Santander — based on in-depth interviews. 
• Discusses the likely trends that will emerge in the technology over the next several years.
• Highlights the factors that will be critical to the success of banks implementing blockchain-based solutions.

Subscribe to an All-Access membership to Business Insider Intelligence and gain immediate access to:

	This report and more than 250 other expertly researched reports
	Access to all future reports and daily newsletters
	Forecasts of new and emerging technologies in your industry
	And more!

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Credit Suisse just revealed its list of top Canadian stock picks.

In a note to clients on May 4, it highlighted nine stocks identified by its analysts as top picks based on a six to 12 month time horizon. All of the companies are either in commodities or related to commodities, and Credit Suisse has price targets between 15% and 40% above where the stocks are currently trading. 

Here are the picks: 

SEE ALSO: Here's why Warren Buffett isn't worried about Berkshire Hathaway when he retires

Nexa Resources

Ticker: NEXA

Price Target: $23 (+34% from current levels)

Market Cap: $2.2 billion 

Thesis: "We rate NEXA Outperform owing to our bullish view on zinc into 2018 and NEXA’s exposure to zinc at 60% of revenues."

TransCanada Corp.

Ticker: TRP

Price Target: $70 (+63% from current levels) 

Market Cap: $49 billion

Thesis: "We view TransCanada Corp. as facing a number of catalysts following the Columbia Pipeline Group acquisition re-rating earlier in the year."

Enbridge Inc.

Ticker: ENB

Price Target: $55 (+77% from current levels) 

Market Cap: $67.3 billion

Thesis: "Following the Line 3 Replacement (L3R) decision from the Minnesota Administrative Law Judge, we believe the last of the major negatives has played out for the stock."

• Credit Suisse is adding more firepower to its stock trading business. 
• Alexander Englander is joining Credit Suisse from Barclays as its head of equity sales in the Americas, according to an internal memo reviewed by Business Insider
• Anthony Buoscio is also joining the Swiss bank from Bank of America Merrill Lynch, where he was a managing director, according to people familiar with the matter.
• These are the latest in a string of splashy hires by Credit Suisse to bolster its equities unit, even as the bank transitions its model broadly to focus more on wealth management. 

Credit Suisse is bolstering its equities business in the US with new senior talent as it tries to grab market share from Wall Street stock trading leaders Morgan Stanley, Goldman Sachs, and JPMorgan.  

Alexander Englander has joined the Swiss bank from Barclays as the head of equity sales in the Americas, according to an internal Credit Suisse memo reviewed by Business Insider. 

Anthony Buoscio has joined Credit Suisse as a managing director in equity salestrading. He was hired from Bank of America Merrill Lynch, where he was a managing director in its New York salestrading unit, according to people familiar with the matter.

A Credit Suisse spokesman confirmed the contents of the memo but declined to comment further on the hires. Barclays declined to comment, and Bank of America did not immediately respond to requests for comment.

The moves add further firepower to the equities team at Credit Suisse, which has loaded up on talent in the past year. The build out also comes as banks reported record equities revenue in the first quarter, as volatility sparked and markets whipsawed back and forth on account of fears of a potential US trade war.  

Mike Stewart, who was hired away from UBS last summer to run global equities, aims to make Credit Suisse a top-5 player in the business. It was seventh in equities revenues in 2017, according to Bloomberg.

"We have more than sufficient resources to be a top-five equities player,” Stewart told Bloomberg.

In addition to Stewart, the bank also made a number of other significant hires, including Michael Ebert from Bank of America as global head of equity derivatives; Doug Crofton from Bank of America as US head of equities sales and trading; and Paul Galietto, formerly of UBS, as its head of Americas equities (he also assumed the role of global head of prime services in February). 

Englander is taking over the head US equity sales role from Selim Akar, who is transitioning to Europe to take on a new role as the head of sales for cash equities and prime services for the region, according to the memo, which was signed by Galietto and Eric Miller, the global head of equity sales.

"Alex and Selim will work closely together to provide world class client coverage in their respective regions," the memo reads in part. "Alex's hire and Selim’s new role, along with our previous hires, demonstrates our commitment to the critically important cash equities business."

Englander was head of New York institutional equity sales and middle market sales at Barclays, where he worked for 16 years. He will start in August and report to Galietto and to Miller.

Buoscio worked at Barclays for 15 years before joining Bank of America in 2015. He will start in July and report to Greg Karcich, a managing director in Credit Suisse's sales and trading department.

This post has been updated with additional information from an internal Credit Suisse memo reviewed by Business Insider.

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Nearly every global bank is experimenting with blockchain technology as they try to unleash the cost savings and operational efficiencies it promises to deliver. 

Banks are exploring the technology in a number of ways, including through partnerships with fintechs, membership in global consortia, and via the building of their own in-house solutions. 

In this report, Business Insider Intelligence outlines why and in what ways banks are exploring blockchain technology, provides details on three major banks' blockchain efforts based on in-depth interviews, and highlights other notable blockchain-based experiments underway by global banks. It also discusses the likely trends that will emerge in the technology over the next several years, and the factors that will be critical to the success of banks implementing blockchain-based solutions.

Here are some of the key takeaways from the report:

• Most banks are exploring the use of blockchain technology in order to streamline processes and cut costs. However, they are also looking to leverage additional advantages, including increased competitiveness with fintechs, and the ability to use the technology to create new business models. 
• Banks are starting to narrow their focus, and are increasingly honing in on tangible use cases for blockchain technology that solve real problems faced by their businesses. 
• Regulators are taking an increased interest in blockchain technology, and they're working alongside major banks to develop regulatory frameworks. 
• Blockchain-based solutions will start to emerge in different areas of financial services. The most successful solutions will solve specific problems for banks and attract a large enough network to create widespread benefits. 

 In full, the report:

• Outlines banks' experiments with blockchain technology. 
• Details blockchain projects at three major banks — UBS, Credit Suisse, and Banco Santander — based on in-depth interviews. 
• Discusses the likely trends that will emerge in the technology over the next several years.
• Highlights the factors that will be critical to the success of banks implementing blockchain-based solutions.

Subscribe to an All-Access membership to Business Insider Intelligence and gain immediate access to:

	This report and more than 250 other expertly researched reports
	Access to all future reports and daily newsletters
	Forecasts of new and emerging technologies in your industry
	And more!

Learn More

Purchase & download the full report from our research store

Join the conversation about this story »

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

Nearly every global bank is experimenting with blockchain technology as they try to unleash the cost savings and operational efficiencies it promises to deliver. 

Banks are exploring the technology in a number of ways, including through partnerships with fintechs, membership in global consortia, and via the building of their own in-house solutions. 

In this report, Business Insider Intelligence outlines why and in what ways banks are exploring blockchain technology, provides details on three major banks' blockchain efforts based on in-depth interviews, and highlights other notable blockchain-based experiments underway by global banks. It also discusses the likely trends that will emerge in the technology over the next several years, and the factors that will be critical to the success of banks implementing blockchain-based solutions.

Here are some of the key takeaways from the report:

• Most banks are exploring the use of blockchain technology in order to streamline processes and cut costs. However, they are also looking to leverage additional advantages, including increased competitiveness with fintechs, and the ability to use the technology to create new business models. 
• Banks are starting to narrow their focus, and are increasingly honing in on tangible use cases for blockchain technology that solve real problems faced by their businesses. 
• Regulators are taking an increased interest in blockchain technology, and they're working alongside major banks to develop regulatory frameworks. 
• Blockchain-based solutions will start to emerge in different areas of financial services. The most successful solutions will solve specific problems for banks and attract a large enough network to create widespread benefits. 

 In full, the report:

• Outlines banks' experiments with blockchain technology. 
• Details blockchain projects at three major banks — UBS, Credit Suisse, and Banco Santander — based on in-depth interviews. 
• Discusses the likely trends that will emerge in the technology over the next several years.
• Highlights the factors that will be critical to the success of banks implementing blockchain-based solutions.

Subscribe to an All-Access membership to Business Insider Intelligence and gain immediate access to:

	This report and more than 250 other expertly researched reports
	Access to all future reports and daily newsletters
	Forecasts of new and emerging technologies in your industry
	And more!

Learn More

Purchase & download the full report from our research store

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• The Financial Times says Barclays' board has considered a merger with Standard Chartered.
• The possible deal is apparently one plan being considered to ward off the activist investor Edward Bramson, who has built a 5.4% stake in Barclays.
• Neither side has issued statements to shareholders, suggesting no serious talks have taken place.

LONDON — Barclays has considered merging with Standard Chartered Bank, according to a report in the Financial Times.

The FT report on Wednesday cited sources close to the talks as saying senior board members at Barclays were considering a StanChart tie-up as one of various possible contingency plans to ward off an activist investor who has built a stake in the bank.

Barclays declined to comment. A representative for StanChart told Business Insider: "We are entirely focused on executing our strategy, and do not comment on this type of speculation."

Neither bank has issued a statement to the market. Public-listing rules mandate that companies must disclose significant talks if outed in the press, suggesting that Barclays has not made any serious approach. The FT report stressed that the idea was in the early stages, that no serious work had been done, and that Barclays' directors had simply "kicked around" the idea.

Reuters on Wednesday morning reported that Barclays had "no plans" for any tie-up with a rival bank, citing two sources at the bank.

Barclays shares were up 0.18% after half an hour's trade in London. Standard Chartered shares were up 3.20% at the same time.

Why Barclays would be scoping out Standard Chartered

The FT says Barclays' board members, including chairman Sir John McFarlane, are considering the merits of a merger with Standard Chartered in response to stake building by the activist investor Edward Bramson.

Bramson's activist fund, Sherborne, has acquired a 5.4% state in the bank in recent months. Bramson is perhaps best known in the UK for waging an extended boardroom battle with Electra Private Equity several years ago.

Bramson almost never speaks publicly about his stake-building activities or his motivations, but the FT reports that Barclays CEO Jes Staley has met with Bramson in New York. Bramson is said to want Barclays to return capital from its underperforming investment bank to shareholders.

To head off any pressure from Bramson, the board is therefore considering plans that could create value for investors. The StanChart tie-up is just one option on the table, according to the FT. Others reportedly include a straightforward return of capital to shareholders, an expansion of Barclays' UK retail business, or even tie-ups with the likes of Credit Suisse or Deutsche Bank.

Would a StanChart deal make sense?

Standard Chartered and Barclays are two very different banks.

The UK-headquartered Barclays is known for its retail, corporate, and investment-banking activity in the UK and the US.

Standard Chartered focuses on commercial and investment banking in Asia, Africa, and the Middle East.

Barclays is withdrawing from its African banking operations, so in that sense the geographic footprint of the two banks would complement each other. But the FT quoted an unnamed finance professional as saying "I'm not sure there are many synergies."

You can read the FT's full story on the potential deal here.

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• Credit Suisse asked its analysts for their top picks in the sector they cover.
• The list covers 94 stocks, or about 15% of their coverage universe.

Credit Suisse has released its annual list of its top investment ideas in the United States.

The Swiss bank asked each of its analysts to round up their top three stock picks for the next six to 12 months, resulting in a massive list of 94 equities, or about 15% of the stocks covered by its research department.

"These should not be viewed as portfolios," the bank warns. Rather, it says, "they are simply a current snapshot of the analysts' top picks in their coverage universes." So if you're looking to dive into a particular sector, these may be the places to start.

We've rounded up Credit Suisse's top pick for each sector and included the bank's take on why it's worth investing in. Scroll to check out the full list:

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FMC

Ticker: FMC

Sector: Chemicals & Agricultural Science

Year-to-date performance: -6.89%

Credit Suisse’s take: "We see significant opportunities for growth in the ag business while the current pullback in the stock due to market concerns around lithium have created a compelling value opportunity."

Source: Credit Suisse

US Steel

Ticker: X

Sector: Metals & Mining

Year-to-date performance: -1.86%

Credit Suisse’s take: "The US flat rolled market is firing on all cylinders, as (a) seasonally demand is accelerating and peaks in 2Q, (b) scrap prices recover from historically low levels at the start of winter, and b) S/D fundamentals benefit from limited imports and a strong US/global economy. We like X for its strong leverage to the cycle, accretion from its Granite City BF restart, and likely asset sales as the company refocuses on its core steelmaking operations."

Source: Credit Suisse

Sealed Air Corp.

Ticker: SEE

Sector: Paper & Packaging

Year-to-date performance: -12.2%

Credit Suisse’s take: "We believe recent share price weakness offers an attractive entry point. In part, we believe weakness has been driven by near-term resin cost headwinds that we view as passing. We believe SEE has entered a period of strong EPS growth."

Source: Credit Suisse

• As diversified and cash-rich retailers like Amazon take the world by storm, investors have been left scrambling to identify companies that will be able to withstand the disruption over the long term.
• Credit Suisse has singled out seven companies it says will continue growing a key measure of financial strength, even amid mounting headwinds.

It's Amazon's world, and the rest of the retail industry is just living in it. Or at least that's how it seems these days.

But Credit Suisse isn't ready to give up hope. The firm recently ran an analysis to assess which companies around the world were best equipped to withstand the so-called retail apocalypse. 

It started by calculating the share-price implied cash flow return on investment for each company in the global retail industry. By comparing this figure with the five-year historical median and its forecast for the next year, Credit Suisse was able to see which companies were already priced for falling returns amid heavy disruption.

By the same token, the firm was able to pinpoint the elite handful of stocks expected to grow returns even as industry headwinds mount. And the findings show that not all hope is lost for (1) companies with a large and growing e-commerce business and (2) discount and value retailers.

"In most cases these companies have a more significant online presence which is benefitting from being asset light (especially relative to brick and mortar retail) and are experiencing stronger top line growth allowing for quicker operational efficiencies," a group of Credit Suisse analysts led by Eugene Kierk wrote in a client note.

Without further ado, here are the seven companies the firm says will generate positive cash flow return on investment going forward.

Zalando

JD.com

Magazine Luiza

• Credit Suisse is hiring flesh-and-blood traders who help clients buy and sell stocks as part of its so-called high-touch offering, bank executives told Business Insider.
• Under its new equities chief, Mike Stewart, the Swiss bank is speaking up about the importance of expensive human traders at a time when the industry is still focused on electronic trading. 

Credit Suisse is making a contrarian bet on human traders.

The Swiss banking giant has hired or promoted a collection of managing directors over the past 18 months as sales traders or other members of its so-called high-touch offering, Paul Galietto, the head of equities for the Americas, told Business Insider.

And maybe as important, the bank is willing to publicly discuss its high-touch offering at a time when many Wall Street firms, including Goldman Sachs, are still highlighting the investment they're making in trading techniques that exclude a human touch.

"There has been an increased need for active managers to take large positions to prove value and differentiate themselves," Mike Stewart, who joined the bank from UBS Group last year as the head of equities, said in an interview. "So the dialogue has swung back to be about the ability to do both, to meld electronic with high-touch offerings, and provide outsized liquidity when it makes sense."

It's not that Credit Suisse isn't making similar investments in electronic trading. But under Stewart, it's betting that as active managers look to beat benchmarks and as volatility picks up, clients will want to take large, concentrated positions in stock markets, and that as they do, they'll look to Wall Street to take on the risk of sourcing and delivering a large block of stock, or take a large block of stock off their hands, and thereby assume any risk that the price may decline.

Not everyone agrees about a need to pay up for experienced traders in a market that still seems obsessed with the kind of speed that advantages computers over humans. Supported by a series of rule changes over the past 20 years, equity markets have increasingly moved toward faster and more efficient trading methods. The industry spent billions of dollars to upgrade its technology, diverting resources away from human traders.

Last year, asset managers sent 49% of their total orders to the algorithmic and direct-market-access channels of their trading partners, according to data compiled by the TABB Group. That's up from 38% in 2014.

The sales desks staffed by humans, by contrast, handled just 33% of the orders last year, down from 43% in 2014.

Even Goldman Sachs, which has a reputation for being among the best at using its balance sheet to facilitate trades, has played up the trend. Goldman President David Solomon, the heir apparent to CEO Lloyd Blankfein, cited the decline in human traders when he spoke at the Milken Institute's annual conference in April.

"When you go back 20, 30 years, we would, at Goldman Sachs, have 500 people making markets in stocks and prices in stocks, every single day," Solomon said, according to Reuters. "Today we have three, all going off technology platforms."

That kind of messaging and strategy has given an opening to Credit Suisse and others who see the market starting to value humans again, Galietto said.

"In the headlong push to fund low-touch solutions that have ever increasing competitiveness, there's been a willingness to reduce the experience level, reduce the seniority, and dilute the talent available to the buy side," Galietto said. "We think that's a mistake."

Last year, the bank hired Doug Crofton from Bank of America Merrill Lynch to run US cash equities trading; he now oversees the bank's high-touch offering. Anthony Buoscio, a sales trader and managing director, will join this summer from BAML. And the firm also added Alexander Englander from Barclays to serve as head of equity sales in the Americas — to name just three recent additions.

Not counting the newcomers, the firm's senior sales traders — those with the title of managing director or director — have an average of 20 years at the bank, while the senior block traders have an average of 14 years' tenure, a spokesman said. It now has 30 senior employees in the Americas in one of those two roles.

Robots need not apply

To be sure, some of Credit Suisse's hiring is intended to fill vacancies left over the prior months and years as the equities business struggled. The bank is also still focused on building out its electronic offering, with a trio of hires there, including the former Instinet CEO Anthony Abenante last year as head of global execution services and John Comerford as global head of quantitative trading strategy.

The bank was one of the earliest to emphasize technology as electronic trading took off, and its Advanced Execution Services platform is considered one of the pioneers in low-latency trading and dark pools.

But as equity markets have gone electronic, the number of venues has proliferated, fracturing the market and making it harder for investors to transact without leaving a footprint.

"The electronification in the marketplace has gotten so severe that the buy side isn't getting the level of service that they have expected in the past," said Dan Sanders, the US head of execution services for the agency broker Olivetree Financial who was previously a senior equity trading executive at Citigroup. "People need a torch to get through the labyrinth of the equity marketplace."

The most challenging trades are often the largest — say, an order so big that it represents several days or even weeks of the average daily volume for a certain stock — and aren't well-suited for electronic market-making. In circumstances where a client wants to exit a position immediately, it may make more sense to call a bank, talk to a sales trader or block trader, and unload the entire position.

"The buy side really focused hard on making their flows efficient, and I think we were really judged for a while on making them efficient," Stewart said. "When you reach that endpoint, you are left with the trades that are the most challenging. In other words, just because you want to automate that order does not mean that you can."

While the data suggests that trading volumes will continue to move to more electronic means, investors will come to value those banks with experienced traders who can accurately price big blocks of stock, said Larry Tabb, the founder of the TABB Group.

"We think capital becomes increasingly important," Tabb said. "There's going to be a larger focus on bigger trades — there will be a bigger focus on risk-taking and capital. To do that, you need educated and very focused people to manage those client relationships."

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• Citigroup has hired a quant trading and derivatives exec from Credit Suisse.
• The bank has hired Jeff Berton to lead Citi Investment Strategies (CIS), a global team within the bank's Markets & Securities Services division focused on quantitative index strategies
• Berton will also be the head of exotics trading in North America.
• This is the latest in the rash of moves in equity derivatives, a corner of Wall Street that's become an intense hiring battleground. 

Citigroup has hired a quant trading and derivatives exec from Credit Suisse, the latest in the rash of equity derivatives moves across Wall Street.

Jeff Berton, formerly the head of Quantitative Investment Solutions (QIS) in the Americas at Credit Suisse, is joining Citi to run a similarly focused unit on a global scale, according to people familiar with the matter. 

Berton will lead Citi Investment Strategies (CIS), a global team within the bank's Markets & Securities Services division focused on quantitative index strategies, and he'll also be the head of exotics trading in North America, the people said. 

Spokesmen for Citi and Credit Suisse declined to comment. Berton could not be reached for comment. 

Prior to joining Credit Suisse in 2016, Berton worked at JPMorgan Chase, where he started his career in 2003, according to FINRA records. 

Competition for equities talent has been fierce in 2018 amid a rebound in volatility that has revived banks' stock-trading businesses, a trend that has been epitomized by the equity derivatives sector.

Equity derivatives traders have become the focus of an intense Wall Street hiring battleground, with more than 40 moves at the level of vice president or higher in equity derivatives in the US this year. Multiple factors are driving the trend, but the catalyst that opened the floodgates was the blowup of the Cboe Volatility Index — known as the VIX — earlier this year, according to industry insiders.

Citi, which underwent a structural reorganization of its equities division earlier this year, in May hired Seok Yoon Jeong, formerly of JPMorgan Chase, as its head of flow volatility trading in the Americas. 

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• Credit Suisse is adding more firepower to its stock trading business. 
• Alexander Englander is joining Credit Suisse from Barclays as its head of equity sales in the Americas, according to an internal memo reviewed by Business Insider
• Anthony Buoscio is also joining the Swiss bank from Bank of America Merrill Lynch, where he was a managing director, according to people familiar with the matter.
• These are the latest in a string of splashy hires by Credit Suisse to bolster its equities unit, even as the bank transitions its model broadly to focus more on wealth management. 

Credit Suisse is bolstering its equities business in the US with new senior talent as it tries to grab market share from Wall Street stock trading leaders Morgan Stanley, Goldman Sachs, and JPMorgan.  

Alexander Englander has joined the Swiss bank from Barclays as the head of equity sales in the Americas, according to an internal Credit Suisse memo reviewed by Business Insider. 

Anthony Buoscio has joined Credit Suisse as a managing director in equity salestrading. He was hired from Bank of America Merrill Lynch, where he was a managing director in its New York salestrading unit, according to people familiar with the matter.

A Credit Suisse spokesman confirmed the contents of the memo but declined to comment further on the hires. Barclays declined to comment, and Bank of America did not immediately respond to requests for comment.

The moves add further firepower to the equities team at Credit Suisse, which has loaded up on talent in the past year. The build out also comes as banks reported record equities revenue in the first quarter, as volatility sparked and markets whipsawed back and forth on account of fears of a potential US trade war.  

Mike Stewart, who was hired away from UBS last summer to run global equities, aims to make Credit Suisse a top-5 player in the business. It was seventh in equities revenues in 2017, according to Bloomberg.

"We have more than sufficient resources to be a top-five equities player,” Stewart told Bloomberg.

In addition to Stewart, the bank also made a number of other significant hires, including Michael Ebert from Bank of America as global head of equity derivatives; Doug Crofton from Bank of America as US head of equities sales and trading; and Paul Galietto, formerly of UBS, as its head of Americas equities (he also assumed the role of global head of prime services in February). 

Englander is taking over the head US equity sales role from Selim Akar, who is transitioning to Europe to take on a new role as the head of sales for cash equities and prime services for the region, according to the memo, which was signed by Galietto and Eric Miller, the global head of equity sales.

"Alex and Selim will work closely together to provide world class client coverage in their respective regions," the memo reads in part. "Alex's hire and Selim’s new role, along with our previous hires, demonstrates our commitment to the critically important cash equities business."

Englander was head of New York institutional equity sales and middle market sales at Barclays, where he worked for 16 years. He will start in August and report to Galietto and to Miller.

Buoscio worked at Barclays for 15 years before joining Bank of America in 2015. He will start in July and report to Greg Karcich, a managing director in Credit Suisse's sales and trading department.

This post has been updated with additional information from an internal Credit Suisse memo reviewed by Business Insider.

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This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

Nearly every global bank is experimenting with blockchain technology as they try to unleash the cost savings and operational efficiencies it promises to deliver. 

Banks are exploring the technology in a number of ways, including through partnerships with fintechs, membership in global consortia, and via the building of their own in-house solutions. 

In this report, Business Insider Intelligence outlines why and in what ways banks are exploring blockchain technology, provides details on three major banks' blockchain efforts based on in-depth interviews, and highlights other notable blockchain-based experiments underway by global banks. It also discusses the likely trends that will emerge in the technology over the next several years, and the factors that will be critical to the success of banks implementing blockchain-based solutions.

Here are some of the key takeaways from the report:

• Most banks are exploring the use of blockchain technology in order to streamline processes and cut costs. However, they are also looking to leverage additional advantages, including increased competitiveness with fintechs, and the ability to use the technology to create new business models. 
• Banks are starting to narrow their focus, and are increasingly honing in on tangible use cases for blockchain technology that solve real problems faced by their businesses. 
• Regulators are taking an increased interest in blockchain technology, and they're working alongside major banks to develop regulatory frameworks. 
• Blockchain-based solutions will start to emerge in different areas of financial services. The most successful solutions will solve specific problems for banks and attract a large enough network to create widespread benefits. 

 In full, the report:

• Outlines banks' experiments with blockchain technology. 
• Details blockchain projects at three major banks — UBS, Credit Suisse, and Banco Santander — based on in-depth interviews. 
• Discusses the likely trends that will emerge in the technology over the next several years.
• Highlights the factors that will be critical to the success of banks implementing blockchain-based solutions.

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