Credit Suisse has until Monday morning to reassure markets, rival UBS is the takeover favorite
Total thrill this weekend. Credit Suisse, the country’s second largest bank, has to find ways to reassure the markets at all costs before they open on Monday morning. Its great competitor UPS emerges as a savior, according to the press. Silence on Saturday dominated both Credit Suisse and UBS, the number one Swiss bank, which is presented as the preferred buyer. In the eyes of the central bank and the financial market policeman.
The Swiss market opens at 8am GMT on Monday (9am in Paris) and if nothing convinces investors that a good solution has been found for an institution seen as a weak link, it could see an even darker day than Wednesday, March. 15. The stock reached a historic low of CHF 1.55 (€ 1.56) and on approach Credit Suisse the market valuation of Credit Suisse was only CHF 7 billion, a straw for a bank that is part – just like UBS – of the thirty institutions in the world also. It is important to let them fail.
How do you rest assured?
How do you rest assured? On Friday evening, the Financial Times opened up to the ball saying UBS was in talks to take full or partial possession of the ball competition. there The SNB “wants a simple solution before the markets open on Monday,” assures Business Daily, adding that it is not certain a deal can be reached.
According to Bloomberg, which cited anonymous sources, UBS is asking public authorities to bear legal costs and potential losses. The financial agency indicates that one of the scenarios under study would be the acquisition of Credit Suisse to retain only Asset and Wealth Management and resale of the investment banking part.
Discussions continue about what fate will be retained for the Credit Suisse Swiss branch. It is profitable, in contrast to the group that lost 7.3 billion Swiss francs last year and expects “significant” losses again this year.
This branch combines banking services for individuals and loans to small and medium enterprises. Another scenario mentioned by analysts in recent days is its listing on the stock exchange, which may make it possible to avoid mass layoffs in Switzerland due to duplication with the activities of UBS Bank. On Wednesday, a lack of confidence in investors and partners forced the central bank to lend 50 billion Swiss francs (50.4 billion euros) to breathe new life into the Zurich institution and reassure markets. The respite was short-lived: buying a bank wouldn’t be expensive today, but an acquisition of this magnitude is very complicated, especially when done in haste.
Redemption but from what?
Credit Suisse has just gone through two years marked by numerous scandals, which, by management’s own admission, have exposed “fundamental weaknesses” in its “internal controls”. Fenma accused him of “serious breach of his prudential obligations” in the bankruptcy of Greensill Financial, which marked the beginning of his setbacks.
UBS, which spent several years recovering from the shock of the 2008 financial crisis, is beginning to reap the rewards of its efforts, and once again its CEO Ralph Hammers made it clear on Wednesday that he wanted to focus on the bank’s strategy and declined to answer a “hypothetical” question about the Credit Suisse takeover. . The competition commission can also raise eyebrows depending on the composition of the takeover.
9,000 job cuts
At the end of October, Credit Suisse unveiled a wide-ranging restructuring plan including cutting 9,000 jobs by 2025, or more than 17% of its workforce. The bank, which employed 52,000 people at the end of October, intends to refocus on its more stable activities and radically transform the commercial banking business.
Much of the investment banking business, which had suffered heavy losses, would be consolidated under the First Boston brand and then outsourced. But Morningstar analysts consider the restructuring “too complex” and not comprehensive enough.
Analysts at the US bank JP Morgan are considering a radical option: for Credit Suisse to “completely” close its investment banking business.