Credit Suisse’s fate could be decided in the next 24 hours

Credit Suisse's fate could be decided in the next 24 hours

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

The investors and clients withdrew their money from Credit Suisse in recent days, as chaos swept through the global banking sector following the collapse of two US lenders.

The bank’s shares lost 25% over the course of the week, despite receiving a $54 billion emergency loan from the Swiss National Bank. The price of financial contracts designed to protect investors against possible losses on their bonds soared to record levels.

More than $450 million was withdrawn from European and US funds managed by the bank between Monday and Wednesday, according to Morningstar.

The Swiss central bank’s lifeline, announced Wednesday night after shares plunged to a new all-time low, bought Credit Suisse time. But by Friday, analysts were speculating that a full-blown bailout would be necessary, and reports of a possible takeover by its biggest Swiss rival, UBS, began to emerge.

A Credit Suisse bank sign is seen on a branch building in Geneva, on March 15. (Fabrice Coffrini/AFP/Getty Images)

Reuters and the Financial Times, citing people familiar with the matter, reported that Swiss regulators were urging banks to reach an agreement before markets opened on Monday to bolster confidence in the country’s banking system. The Financial Times said the boards of directors of UBS and Credit Suisse were expected to meet separately over the weekend.

Credit Suisse and UBS declined to comment to Reuters.

BlackRock, which owns 4% of Credit Suisse, denied a separate Financial Times report that it was preparing an alternative offer for all or part of the embattled bank.

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

Credit Suisse, which is among the 30 largest banks in the global financial system, He’s been on the ropes for years after a series of scandals, huge losses and strategic missteps. His stock is down 75% in the last 12 months. But the confidence crisis escalated rapidly this month.

The collapse of Silicon Valley Bank last week, the biggest for a US lender since the 2008 global financial crisis, sent investors fleeing other perceived weak players.

Then Credit Suisse dropped another bombshell. Publishing its annual report on Tuesday, the 167-year-old bank acknowledged a “material weakness” in its financial reporting, adding that it had failed to adequately identify potential risks to its financial statements.

The next day, its largest shareholder — the Saudi National Bank — made it clear it would not pump more money into the bank, after spending $1.5bn last year for a nearly 10% stake. That spooked investors.

In a note on Thursday, JPMorgan banking analysts wrote that a takeover by UBS was the most likely outcome.

UBS would likely spin off Credit Suisse’s Swiss business, as the combined market share would represent around 30% of Switzerland’s domestic banking market and would mean “too much market share concentration and control risk,” they added.

In an article on Saturday, the Neue Zürcher Zeitung—a newspaper in Zurich, home to both banks—said that “the future of Credit Suisse will be decided this weekend.” The Swiss government is expected to make a statement on Sunday night, he adds.

Anna Cooban and Rob North contributed to this article.

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Written by Editor TLN

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