Credit Suisse shares spike on reported State Street takeover interest

The Swiss bank logo Credit Suisse appears at its headquarters at Paradeplatz Square in Zurich, Switzerland October 1, 2019. REUTERS / Arnd Wiegmann

MILAN, June 8 (Reuters) – Shares in Credit Suisse (CSGN.S) turned sharply higher on Wednesday afternoon, with traders citing the Description inside Paradeplatz to US-based State Street (STT.N) planning a takeover bid for the troubled lender, although some in the industry are skeptical about the demand.

Credit Suisse shares rose 3.8% in Zurich after jumping after the report in the Swiss finance blog. From the low hit earlier in the day, shares were up more than 14%. The wider European stock market (.STOXX) there was a 0.7% decrease.

The stock fell close to its low for more than 20 years during the session after the company warned of a likely loss in the second quarter as volatility hit its investment bank. Read More

Shares in State Street (STT.N)fell more than 5%, underperforming the wider market.

Citing one unidentified source, Inside Paradeplatz said State Street would offer a share of 9 Swiss francs, a premium of more than 30% for Tuesday’s final price. That was worth 23 billion francs for Credit Suisse ($ 23.6 billion).

“We are not to respond to an earlier news report,” State Street said in a statement. “As we discussed before, we are focused on acquiring our Brown Brothers Harriman Investor Services business.”

Credit Suisse declined to comment.

Analysts were skeptical.

“For many reasons, we see this combination as very likely,” wrote Jefferies analysts, citing a pending State Street deal to buy Brown Brothers Harriman investor services business and legal challenges / Swiss bank business.

Top U.S. brokerage, in a message to clients, questioned the rationale for any interest on State Street for a Swiss bank, citing vague synergies for a US custodian, as well as the risk of capital costs, job cuts and litigation risks.

The speculation of the contract comes when Credit Suisse issued its third consecutive quarterly profit warning on Wednesday.

The bank has described 2022 as a “transition year” in which it seeks to turn the page on costly scandals that have led to an almost complete relocation of senior management and restructuring in a bid to curb risk-taking, especially in its investment bank. .

Aside from the challenges of the macroeconomic environment, Credit Suisse is embarking on reform following a series of barriers to investor confidence.

Artisan Partners’ top ten shareholders told Reuters last month that Credit Suisse should start looking for a new CEO, the first major investor to publicly call such a move. Read More

Separately, sources told Reuters last week that Credit Suisse is in the early stages of weighing options to strengthen its capital after a series of losses eroded its financial buffer. Read More

($ 1 = 0.9739 Swiss francs)

Reporting by Danilo Masoni; Additional reporting by Niket Nishant; Edited by Ira Iosebashvili, Elaine Hardcastle and Richard Chang

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