The crisis of banks reaches the “capital of money”… the decline in the price of “Credit Suisse” shares and negotiations for the acquisition

The crisis of banks reaches the “capital of money”… the decline in the price of “Credit Suisse” shares and negotiations for the acquisition
The crisis of banks reaches the “capital of money”… the decline in the price of “Credit Suisse” shares and negotiations for the acquisition

Credit Suisse has faced pressure over the past period

  • Credit Suisse shares fell more than 30 percent

International concern about a major economic crisis, no less dangerous than the one that occurred in 2008following the collapse of two American lenders in a crisis in the sector, the most prominent of them Silicon Valleya crisis that reached Switzerland – the capital of money.

Leading the largest Swiss banksUSB UPS“Talks to Takeover”Credit Suisse“In full or in part – after he faced pressure during the past days, following the crisis – according to a report published by a newspaper Financial Times.

And with the closing of financial markets, on Friday, the bank’s shares had fallen by 8 percent, according to Agence France-Presse.

The Swiss Central Bank and the Financial Markets Supervisory Authority have told their counterparts in the United States and Britain that their “first” plan to end the crisis of confidence facing Credit Suisse is to merge it with UBS, according to the Financial Times, citing unnamed sources.

The Source stated that the Swiss Central Bank “wants lenders to agree on a simple and direct solution, before the opening of financial markets on Monday,” acknowledging at the same time that “there is no guarantee” that an agreement will be reached.

And UBS wants to estimate the risks of a full or partial acquisition of its competitor, which it may represent to his business, another Source told the newspaper.

The Swiss Central Bank and Credit Suisse declined to respond to AFP’s request for comment, as did the Financial Times, while UBS and the watchdog did not immediately respond.

The banking crisis arrives

Worried about infection

Credit Suisse, which has been experiencing difficulties for two years, was considered a weak link in the banking sector due to a number of scandals and a major restructuring program launched last October.

Its market value took a big hit this week amid fears of contagion from the collapse of two US banks, Silicon Valley Bank and Signature Bank. This is in addition to the publication of its annual report, which indicated “fundamental weaknesses” in its internal controls.

However, its shares fell sharply, on Wednesday, after the National Bank of Saudi Arabia, its main shareholder, refused to provide more financial assistance to the troubled bank due to regulatory controls, according to the French Agency.

By Wednesday, the Swiss central bank had pledged to lend Credit Suisse $53.9 billion in the face of pressure.

According to Reuters, the Swiss Central Bank pumped, on Thursday, an amount of $ 54 billion to support liquidity in the bank after the decline in its shares and bonds, which raised concerns about a global banking crisis.

Analysts from JPMorgan had put forward the idea of ​​UBS acquiring Credit Suisse, considering it the “most likely” scenario.

The idea of ​​merging the largest Swiss banks often arises, but it is rejected against the backdrop of competition and the risks to the stability of the Swiss financial system, given the size of the bank that will result from that merger, according to AFP.

The banking crisis arrives

Switzerland is at the heart of the crisis

Reuters points to a series of “excesses” over several years, changes in senior management, billions of dollars in losses, and a strategy that led to the chaos of the 167-year-old Swiss bank.

The sale of Credit Suisse shares began during 2021, due to losses linked to the collapse of the investment fund Archegos and Greensill Capital.

And in January 2022, Antonio Horta Osorio resigned as chairman of the board for violating Corona rules, just eight months after he was appointed to fix the ailing bank, according to Reuters.

Reuters says that later in July, the new CEO and restructuring expert Ulrich Korner revealed the bank’s strategy review, but failed to gain investor confidence, after which an unfounded rumor about the bank’s imminent default during the fall led to fear of customers and some of them left the bank.

Then, Credit Suisse noted in February that customers withdrew 110 billion Swiss francs ($119 billion) of funds over the past quarter, and the bank posted its biggest annual loss of 7.29 billion Swiss francs since the financial crisis, according to Reuters.

Credit Suisse shares fell more than 30 percent on Wednesday, after the main shareholder, Al- Bank of Saudi Arabia, refused to provide more financial aid to the ailing Swiss banking giant.

The market value of the “Credit Suisse” bank witnessed a sharp decline this week due to fears of transmission of the collapse of two US banks, in addition to its annual report, which indicated “fundamental weaknesses.”

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The article is in Arabic

Tags: crisis banks reaches capital money .. decline price Credit Suisse shares negotiations acquisition