- Second biggest bank in Switzerland losing investors’ trust in the country.
- UBS and Credit Suisse deal is expected by Monday.
- Swiss bank business can be captured by UBS on a successful deal with Credit Suisse.
After a torrid week for the second-biggest bank in Switzerland, investors are pulling their money out of turmoil from Credit Suisse which has swept the bank industry around the world after the collapse of two US leaders. The fate of Credit Suisse can thus be decided in the next 36 hours.
The bank lost almost 25% of its shares by the end of the week despite of $54 billion emergency loan from Swiss National Bank. The financial contracts are designed to protect investors against possible losses on its bond soared to record levels of losses.
Funds have been managed by banks between Monday and Wednesday from various sources including more than $450 million from Europe and US funds.
It was announced late Wednesday night about the Swiss Central bank lifeline which bought Credit Suisse sometime after crashing a new record low but, it was only till Friday. Later speculations about the need for full-blown rescue were made and a possible takeover is expected to happen by the biggest Swiss rival UBS.
Now Monday is expected to show some hope and confidence in the country’s banking system and both Financial Times and Reuters reported that Swiss regulators are urging to agree to the deal before the market break open on Monday. Board meetings were to be held over the weekend between UBS and Credit Suisse separately. But both have declined to confirm the same.
BlackRock on the other hand owns 4% of Credit Suisse and is drawing an alternative bid as per Financial Times.
“BlackRock is not participating in any plans to acquire all or any part of Credit Suisse, and has no interest in doing so,” a BlackRock spokesperson told CNN.
The stock of Credit Suisse which is one of the top 30 Global Banks is down by 75% over the past 12 months. It has been on the ropes for years after facing huge losses and a series of scandals.
Other banks which failed including Silicon Valley Bank which is the biggest lender in the US since 2008 have affected investors and left them fleeing.
In an annual report published by Credit Suisse on Tuesday which 167-year-old bank busted with the statement “Material Weakness” in the report directly pointing to its failure and has also mentioned that it needs to identify potential risks.
Saudi National Bank which is the biggest shareholder of Suisse Credit made clear that it wouldn’t be pumping any more money into the bank on the following day. It spent $1.5 billion last year for a stake of almost 10%.
The business Swiss can be changed by UBS Credit Suisse’s take-over deal as the market share would make up to 30% of Switzerland’s domestic banking market. On Thursday banking analysts of JP Morgan wrote that a takeover by UBS shall be the endgame that was indicated in the above-said Swiss bank business capture calculation.
Swiss Government in the process is expected to make a statement on Sunday evening and an article in a newspaper in Zurich stated that “the future of Credit Suisse will be decided by this weekend”
