Credit Suisse Street Survey: “I Invested and Bought Even More Stocks”
The deep fall of Credit Suisse shocked many, but many passers-by in Zurich also saw it coming: That’s what Mr. and Mrs. Schweizer think about the weakness of the big bank.
03/16/2023
The Federal Council will continue talks with bank representatives on Sunday. It is expected that the public will be informed afterwards.
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2:01 p.m
Credit Suisse rejects UBS’s offer
UBS’s offer to take over CS for CHF 1 billion is apparently rejected by CS, as “Bloomberg” writes. The reason: At around 25 centimes per share, the offer is too low and would damage the shareholders. On Friday, the value of a CS share was 1.86 francs.
According to reports from “Bloomberg”, the largest shareholder, the Saudi National Bank, approves the rejection of the offer.
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1:39 p.m
Ralph Hamers is to become head of the new major bank
The cornerstones of the merger of UBS and CS are in place. This is reported by the “Handelzeitung”. “In a takeover, there is no reason for the acquiring bank to change its top staff,” a Source told the newspaper. Rumors that former UBS CEO Sergio Ermotti will take over the helm of the new big bank have turned out to be untrue. Ralph Hamers, current head of UBS, would also lead the new big bank.
According to media reports, UBS boss Ralph Hamers could also become the boss of the new big bank. (archive image) KEYSTONE/GAETAN BALLY
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12.50 p.m
Is UBS buying CS for around a billion?
According to a report by the Financial Times, UBS is said to have offered to take over CS for one billion. Swiss legislation is now to be amended in such a way that no shareholder vote is required.
The deal between the two banks should be wrapped up as early as Sunday evening.
This would not result in a bank that is as big as UBS and CS together, as economic historian Tobias Straumann tells SRF. Rather, it is about dismembering the parts of CS within the framework of UBS and partially selling them.
Accordingly, UBS offered to pay 25 centimes per share in its own shares. On Friday, CS ended trading at around CHF 1.86. In addition, UBS insisted that the deal would be void if its default spreads, i.e. the protection against default, increased by 100 basis points or more.
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12:17 p.m
Jordan is silent
National Bank President Thomas Jordan leaves the Bernerhof and did not comment on the media that were there. It remains exciting.
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11:57 a.m
Brits already approve fusion
The British banking regulators have apparently already approved the takeover of Credit Suisse by UBS. At least that is what the British news channel Sky News (online) reports.
The Bank of England has signaled to its international peers and UBS that it will back the emergency deal the two banking giants planned to announce on Sunday, Sky writes.
UK Government Chancellor Jeremy Hunt and Bank of England Governor Andrew Bailey will be kept up to date on developments surrounding the most significant global banking merger since the financial crisis 15 years ago.
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11:26 a.m
Bank staff association calls for task force on CS jobs
In view of the possible impending takeover of CS by UBS, the Swiss Bank Staff Association (SBPV) is calling for a task force to safeguard jobs. Representatives of the employer, the staff committee and the employee associations should be represented in the task force.
Other stakeholders involved – be they other banks, the SNB or the Confederation – are also invited to participate. “No facts may be created before the social partners have been involved,” said a statement from the association on Sunday.
It is to be feared that there are significantly more jobs at Credit Suisse than were communicated last fall when the bank was strategically realigned. In addition, according to the association, tens of thousands of jobs outside of the banking industry would also be at risk.
According to earlier information, Credit Suisse employed around 16,700 people in Switzerland at the end of 2022, and 50,480 worldwide. Last October, the bank announced that around 9,000 jobs would be cut worldwide from around 52,000 jobs at the time. According to this, the bank should still have 43,000 employees by the end of 2025, it was said at the time.
The social plan that has existed with Credit Suisse since 2016 is good and must be applied in every scenario. However, additional measures are needed to cushion the dramatic economic consequences, the SBPV continued in its statement. “Neither the thousands of committed CS employees who are successful in Switzerland, nor the general public should foot the bill for the mistakes of the previous leadership.”
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10:09 a.m
These people decide about the future
According to the “Bloomberg” portal, the string pullers behind the scenes are Urban Angehrn, Director of the Swiss Financial Market Supervisory Authority, SNB President Thomas Jordan and Federal Councilor and Finance Director Karin Keller-Sutter. On behalf of CS, CEO Ulrich Körner and Chairman of the Board of Directors Axel Lehmann are present at the talks. UBS CEO Ralph Hamers and Chairman of the Board of Directors Colm Kelleher represent the interests of UBS.
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8:48 a.m
Information should be given on Sunday
As the “Blick” knows, the Federal Council wants to provide information on the next steps on Sunday. The desired scenario of the supervisory authorities is a merger of the two big banks CS and UBS. The so-called Plan A is intended to stop the total collapse of investor confidence in Credit Suisse, writes the British financial newspaper. A collapse of CS as one of 30 global systemically important banks would trigger a chain reaction that could no longer be controlled. A possible emergency merger with UBS was already indicated at the end of the week. The liquidity aid of CHF 50 billion from the National Bank that was spoken on Wednesday evening only provided temporary relief. Credit Suisse shares already lost significant value again on Friday. At the close of trading, a share cost 1.86 francs – minus eight percent.
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8:47 a.m
The Federal Council arrives at the Bernerhof
Now the crisis talks between representatives of UBS and CS, as well as the Federal Council, begin. As “20 minutes” reports, the first federal councilors have just arrived at the Bernerhof, where the talks will take place. Experts assume that a solution should be found before the start of the stock market on Monday morning.
The FDF did not want to comment on the meeting at the request of the Keystone-SDA news agency. According to a photographer from the agency, the shutters at the Bernerhof are down. A video from “20 minutes” showed Energy Minister Albert Rösti, Interior Minister Alain Berset and Defense Minister Viola Amherd arriving at the Bernerhof.
According to the media, it should again be about the rescue of Credit Suisse. Among other things, UBS is demanding around six billion dollars, the Reuters news agency wrote late Saturday evening, citing people with knowledge of the talks. Discussions about this are still ongoing and the number could still change.
“We must […] check whether they should be given the opportunity to distribute buses,” said Mitte boss Gerhard Pfister in an interview with the “SonntagsZeitung”. However, he did not want to readjust the rules for systemically important banks that were decided after the financial crisis. He trusts the CS leadership around boss Ulrich Körner and chairman of the board Axel Lehmann.
FDP President Thierry Burkart also wants to check the “effectiveness of regulation” of the banks, as he said in an interview with the “SonntagsZeitung”. “We also have to check whether sanctions have enough effect.” But he warns against quick shots: “CS was confronted with high fines from the regulators in the USA, Great Britain and France.” The current situation did not prevent that either.
Blocher describes takeover as “bad thing”
According to media reports, in the talks about the rescue of CS, the major bank UBS demanded billions in state guarantees in the event of a possible takeover of CS. Among other things, UBS is demanding around six billion dollars, the Reuters news agency wrote late Saturday evening, citing people with knowledge of the talks. Discussions about this are still ongoing and the number could still change.
The former SVP Federal Councilor Christoph Blocher described a possible merger of the big banks Credit Suisse (CS) and UBS as a “bad thing” for the Swiss workplace. In the long run, this would also be a problem for bank customers, said the 82-year-old industrialist in an interview with the “SonntagsBlick” published online on Saturday. “If there is no more competition, the companies will be at the mercy of the sole bank.”
Investment banking expert Andreas Ita, on the other hand, argued differently: A merger of CS with UBS would “immediately create calm”. UBS could even benefit from the fact that the financial market regulator would probably wave through such a merger, which was previously considered unappreciated, Ita said in an interview with “NZZ am Sonntag”. «In the current situation is […] a certain pragmatism is required.»
However, a merger would happen to the chagrin of the employees, who would have to fear a massive downsizing. In the case of a sale abroad, this risk is not so great.
«Dr. Doom»: Split CS immediately
Also known as «Dr. Doom”, well-known US star economist Nouriel Roubini called for the fastest possible split of CS in an interview with the “SonntagsZeitung”. Business and asset management are to be separated from the investment bank. “If the bank needed a full bailout, the National Bank wouldn’t have enough money for it.” Switzerland’s first concern must be a solid CS commercial bank.
The lurching big bank Credit Suisse had recently suffered from a significant loss of investor confidence. The share price had fallen to a record low after the bank’s largest investor ruled out providing further capital and the institute continued to struggle with cash outflows.
The Swiss National Bank (SNB) then made loans of up to CHF 50 billion available to the institute. For the central bank, financial regulators and government, it is also about preventing a general banking crisis. They are said to be initiating takeover talks between CS and UBS, which should be completed before the stock market opens on Monday. A full merger would create one of the largest systemically important financial institutions in Europe.
Credit Suisse Street Survey: “I Invested and Bought Even More Stocks”
The deep fall of Credit Suisse shocked many, but many passers-by in Zurich also saw it coming: That’s what Mr. and Mrs. Schweizer think about the weakness of the big bank.
03/16/2023
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