London
DailyExpertNews
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The fate of Credit Suisse could be decided in the next 24 hours after a torrid week for Switzerland’s second largest bank.
Local media reported that the Swiss cabinet met at 5 p.m. local time (12 p.m. ET) on Saturday for a crisis meeting at the Treasury Department to discuss the future of the bank, as reports circulated of a possible takeover of the ailing bank by its biggest Swiss rival. , UBS (UBS).
Investors and customers have been pulling their money out of Credit Suisse in recent days as the global banking industry was thrown into turmoil following the collapse of two US lenders.
Shares of the bank lost 25% over the week, despite a $54 billion emergency loan from the Swiss National Bank. The price of financial contracts designed to protect investors from potential losses on its bonds rose to record highs. More than $450 million was withdrawn from European and US funds managed by the bank between Monday and Wednesday, according to Morningstar.
The Swiss central bank’s lifeline, announced late Wednesday evening after the stock crashed to a new all-time low, only bought up Credit Suisse (CS) for some time.
Reuters and the Financial Times, citing people familiar with the matter, both reported that Swiss regulators were urging banks to strike a deal before markets open Monday to restore confidence in the country’s banking system. strengthen. The FT said the boards of directors of UBS and Credit Suisse were expected to meet separately this weekend.
Credit Suisse and UBS both declined to comment to Reuters.
BlackRock (BLK), which owns 4% of Credit Suisse, denied a separate report in the Financial Times that it was preparing an alternative offer for all or part of the beleaguered bank.
“BlackRock is not participating in any plans to acquire all or part of Credit Suisse and has no interest in doing so,” a BlackRock spokesperson told DailyExpertNews.
Credit Suisse, one of the top 30 banks in the global financial system, has been in trouble for years after a series of scandals, massive losses and strategic missteps. The stock is down 75% in the last 12 months. But the crisis of confidence quickly escalated this month.
Last week’s bankruptcy of Silicon Valley Bank, the largest by a US lender since the 2008 global financial crisis, caused investors to flee from other players perceived as weak.
Then Credit Suisse dropped another bombshell. When it released its annual report on Tuesday, the 167-year-old bank acknowledged “material weakness” in its financial reporting, adding that it had not adequately identified potential risks to its financial statements.
The next day, the largest shareholder – the Saudi National Bank – made it clear that it would no longer pump money into the bank, having spent $1.5 billion last year for a nearly 10% stake. That scared off investors.
In a note on Thursday, banking analysts at JPMorgan wrote that a takeover by UBS was the most likely endgame.
UBS would likely spin off the Swiss business from Credit Suisse, as the combined market share would be about 30% of the Swiss domestic banking market and would mean “too much concentration risk and market share control,” they added.
– Anna Cooban and Rob North contributed to this article.
