Crucial weekend for Credit Suisse
Credit Suisse – one of the 30 banking behemoths in the world too big to let them sink – has two days to find the formula that will allow it to reassure and convince, before the opening of the markets on Monday and the specter of a new week black.
Friday evening, the Financial Times affirmed, with several anonymous sources in support, that UBS – the number one in the sector in Switzerland – is in talks for the total or partial takeover of its rival, with the express blessing of the Swiss regulatory authorities. .
The Swiss central bank “wants a simple solution before the markets open on Monday”, assures the business daily, which recognizes that it is not certain that an agreement can be reached.
Neither Credit Suisse nor the SNB wanted to comment to AFP. UBS and the Swiss financial market watchdog (Finma) did not respond to requests immediately.
Credit Suisse is certainly not expensive. After a black week on the stock market which forced the central bank to lend 50 billion Swiss francs (50.4 billion euros) to give air to the Zurich establishment and reassure the markets, it was only worth just over 8 billion Swiss francs (8.1 billion euros) at the close on Friday evening.
But an acquisition of this size is dauntingly complex, and moreover urgent.
And although the two regulators asserted at the height of the storm that “Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks”, the soaring prices of hedging instruments for the bank , CDS (Credit default swaps), is a sign of a lack of confidence.
– Redemption but of what? –
Credit Suisse has just experienced two years marked by several scandals, which revealed by management’s own admission “substantial weaknesses” in its “internal control”. Finma had accused him of having “seriously breached his prudential obligations” in the bankruptcy of the financial company Greensill, which marked the start of the black series.
In 2022, the bank suffered a net loss of 7.3 billion Swiss francs, against the backdrop of massive withdrawals of money from its customers. It still expects a “substantial” pre-tax loss this year.
“This is a bank that never seems to get its house in order,” noted IG analyst Chris Beauchamp in a market commentary this week.
As for UBS, it has spent several years recovering after flirting with disaster during the 2008 crisis. of his efforts.
The hypothesis of a takeover of Credit Suisse by a bank had also been mentioned by analysts at JP Morgan this week, “with UBS as a potential option”.
Given the weight of a union, analysts believe that the Swiss branch of Credit Suisse, which includes retail banking and loans to SMEs, could be listed on the stock market or split.
It would also be a way to avoid massive layoffs of employees in Switzerland because of the inevitable duplication of activities.
Only the management of funds and fortune could then be transferred to UBS or another suitor, indicates the FT.
Another obstacle to a merger: the Competition Commission, said a former boss of Finma, Eugene Haltiner, in an interview with the CH Media group. “Comco would undoubtedly see significant obstacles because the two establishments have a dominant position in the market,” he explained.
– Faster, stronger –
With the help of the central bank on Wednesday, Credit Suisse gained “precious time”, say Morningstar analysts, judging however that its restructuring was “too complex” and did not go “far enough” to reassure lenders , customers and shareholders.
Among other things, they suggest that Credit Suisse sell its money-losing brokerage business.
Analysts at the American bank JP Morgan are considering a radical option which would be to purely and simply “completely close” the investment banking activity.
At the end of October, Credit Suisse unveiled a vast restructuring plan including the elimination of 9,000 positions 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 most stable activities and radically transform its business banking.
A large part of the activities of the investment bank, which suffered heavy losses, must be grouped under the First Boston brand, named after an American investment bank that Credit Suisse had absorbed in 1990, then gradually outsourced.