Wednesday, 29 May 2024

Credit Suisse crisis… What are possible scenarios?!‎


اقرأ المزيد

The crisis that Credit Suisse is going through raised the concerns of investors and shareholders, following a rapid decline in the shares of the Swiss lender, when the bank admitted that it had found a “fundamental weakness” in its financial reports. Its largest shareholder – the National Bank of Saudi Arabia – said it could not inject more money into the Swiss bank, in part for regulatory reasons. Questions arose about his possible fate?!

Repair plan:

A recent report by “CNBC” asked about the expected scenarios regarding the fate of the defaulting lender, is it bankruptcy or sale?

Credit Suisse is currently undergoing comprehensive strategic reforms aimed at restoring stability and profitability after a series of losses and scandals, but markets and stakeholders are still not convinced, according to the report.

Credit Suisse may have received liquidity as a lifeline from the Swiss National Bank, but analysts are still assessing the beleaguered bank’s expectations, weighing the option to sell and whether the bank is really “too big to fail.”

Takeover deal:

It comes after the Financial Times reported on Friday that UBS was in talks to acquire all or part of Credit Suisse, citing several people involved in the discussions. Neither bank commented on the report when contacted by CNBC. According to the Financial Times, the Swiss National Bank and the Swiss Financial Market Supervisory Authority, the regulator, are behind the negotiations aimed at boosting confidence in the Swiss banking sector. And the bank’s shares, listed in the United States, rose about 7% in after-hours trading in the early hours of Saturday morning.

Shares fell on Friday, posting their worst weekly decline since the onset of the coronavirus pandemic, and failed to sustain Thursday’s gains that followed the announcement that Credit Suisse will obtain a loan of up to 50 billion Swiss francs ($54 billion) from the central bank.

The report referred to talks about a partial or total takeover by its local competitor, “UPS”, which boasts a market capitalization of about $60 billion.

For his part, said Peta Wittmann, chairman and partner in the Swiss consulting firm Porta Advisors, he expects to announce the merger before the market opens on Monday.

The banking expert warned of the repercussions that Credit Suisse would be exposed to if the talks failed, while Kian Abu Hussein of JPMorgan described the acquisition as “the most likely scenario, especially by UBS.”

Infection spread:

In the context, Barry Norris, CEO of Argonaut Capital, stressed the need to reach a solution to the crisis, warning of the spread of infection in Europe, especially since if he solves his balance sheet in an unregulated manner, these problems will spread to other financial institutions in Europe and outside. The banking sector as well, and Norris said that commercial real estate and private equity are also considered vulnerable to what is happening in the financial markets at the present time.