hectic saturday the one that lives in the headquarters of Credit Suisse. The bank’s board of directors is studying alternatives so that next Monday at nine o’clock the bank opens its doors and peace of mind has returned to the market. Until now, the only plausible option is for UBS to finally launch a takeover offeras the Swiss authorities want.
It’s not going to be easy. Credit Suisse wants to prioritize its own roadmap and stand alone. The same happens with UBS who, however, begins to get used to the idea that he will have to act as an emergency rescuer. So much so that, according to Bloomberg, He would have already asked the National Bank to offer him guarantees and benefits in case he takes the final step.
Apparently, different scenarios are already beginning to be discussed. Aim? That the Swiss government assume certain legal costs and offer toppings before possible potential losses, according to the sources that the British media has consulted.
It should not be forgotten that Credit Suisse had €1.2 billion in legal provisions by the end of 2022; and plans to add another $1.2 billion to that total from various pending regulatory investigations and lawsuits that still need to be resolved, according to Bloomberg Intelligence.
For now it is not clear how the purchase operation by UBS will be articulated if it occurs. The most probable option, and that advanced JP Morgan this week, is for the new owner to get the wealth and asset management units. The investment banking division would be sold. For this business, the candidates could be entities such as JP Morgan either Goldman Sachs, that have been sounding like candidates for months if Credit Suisse itself had kicked off the spin-off.
It also remains to be seen what would happen to the banking unit retail which operates in Switzerland. The normal thing would be that it was also sold to any local operator that may be interested in it. Another possibility would be to launch an IPO, since it is the most profitable part of the business.
At the moment nothing is closed. Time is running out, and so are rumors. This Saturday the Financial Times published that black rock She might be interested in taking over the Swiss bank. Minutes later, the fund directed by Larry Fink denied that possibility, and assured that it was not considering launching any operation.
As the future clears up, the doors are closing on Credit Suisse. As this newspaper has already reported, this Friday at the last minute four of the main European banks chose to restrict their operations with the Swiss bank. Among them would be Société Générale and Deutsche Bank.
The 1-year CDS, default insurance, closed this Friday at 2,426 points, according to Refinitiv. That is to say, the risk they see of falling is very high. The stock market is also a faithful reflection of the market’s nervousness. Credit Suisse shares closed on Friday at 1.86 francs Swiss after leaving 8% in the day, thus extending the decreases up to 26% in the week.
A situation that was reached after the Swiss National Bank itself gave unlimited liquidity to Credit Suisse and that the entity requested 54,000 million euros. However, deposit outflows have been maintained in recent days and there are doubts about the capacity that the entity may have to meet all the requests that it has pending and that there are many.
The solution that arrives this weekend will be looked at with a magnifying glass by the rest of the world regulators. So, the European Central Bank is vigilant to avoid contagion to the eurozone. In fact, in the last hours there have been emergency meetings to analyze the evolution of deposits and check if any entity could be at risk.
The result of these analyzes has been favorable for European banks. The Bank of Japan is also analyzing what happens with Credit Suisse, as well as the Federal Reserve (FED) in the United States. Even the Bank of China ensures that it is also monitoring the situation at all times.
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