Credit Suisse’s fate will face the weekend. Will UBS exit with a bailout bid?

London (CNN) The fate of Credit Suisse could be decided in the next 24 hours after a difficult week for Switzerland’s second largest bank.

Switzerland’s cabinet is meeting for a crisis session at 5 p.m. (12 p.m. ET) on Saturday to advise on the future of the ailing bank, local media reported. UBS (UBS). A spokesman for Switzerland’s finance ministry declined to comment.

Investors and customers have pulled their money out of Credit Suisse in the past several days amid turmoil in the global banking industry following the collapse of two US lenders.

Despite an emergency $54 billion loan from the Swiss National Bank, the bank’s shares lost 25 percent for the week. The price of financial contracts designed to protect investors against potential losses on bonds has risen to record levels. From Monday to Wednesday, more than $450 million was withdrawn from European and American funds managed by the bank, Morningstar reported.

A lifeline from the Swiss central bank, after stocks fell to new record lows on Wednesday night, was the only buy. Swiss Credit (CS) a while.

Reuters and the Financial Times, citing people familiar with the matter, both reported that Swiss regulators are asking for confidence in the country’s banking system before markets open on Monday to agree to rescue UBS Credit Suisse. The FT said the boards of UBS and Credit Suisse are expected to meet separately at the end of the week.

Credit Suisse and UBS both declined to comment to Reuters.

Blackrock (BLK)Credit Suisse, which owns 4%, denied it was preparing an alternative bid for all or part of the bank, according to a separate report by the Financial Times.

“BlackRock is not involved in any plans to acquire all or any part of Credit Suisse and has no intention of doing so,” a BlackRock spokesperson told CNN.

Credit Suisse, one of the top 30 banks in the global financial system, has been on the ropes following a series of scandals, high losses and strategic mistakes. The stock is down 75% in the past 12 months. But the crisis of confidence has escalated rapidly this month.

In the year The collapse of Silicon Valley Bank last week, the biggest U.S. lender since the 2008 global financial crisis, sent other players fleeing investors who were seen as weak.

Then Credit Suisse dropped another bombshell. The 167-year-old bank, which published its annual report on Tuesday, admitted a “material weakness” in its financial report and said it failed to adequately identify potential risks to its financial statements.

The next day, its biggest shareholder – the National Bank of Saudi Arabia – made it clear that it would not put any money into the bank after shelling out $1.5 billion for a 10% stake last year. That surprised investors.

In a note on Thursday, JPMorgan banking analysts wrote that a takeover by UBS is the most likely end game.

UBS is likely to divest Credit Suisse’s Swiss business as the combined market share covers around 30% of Switzerland’s domestic banking market and means “too much concentration risk and market share control”.

—Anna Cuban and Rob North contributed to this article.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *