Credit Suisse shares soar on reported interest in State Street takeover

MILAN, June 8 (Reuters) – Shares of Credit Suisse (CSGN.S) rose sharply on Wednesday afternoon, with traders citing a report from Inside Paradeplatz that U.S. firm State Street (STT.N) is planning a bid public purchase of companies in difficulty. lender, although some in the industry doubt this claim.

Shares of Credit Suisse ended up 3.8% in Zurich after surging following the report by the Swiss financial blog. Since hitting lows earlier in the day, stocks are up more than 14%. The broader European stock market (.STOXX) fell 0.7%.

The stock had fallen near its lowest in more than 20 years earlier in the session after the company warned of a likely second-quarter loss as volatility hit its investment bank. Read more

In the United States, shares of State Street (STT.N) ended down 5.4% at $69.04. U.S.-listed shares of Credit Suisse closed down 1% at $6.87.

Citing an unidentified source, Inside Paradeplatz said State Street would offer 9 Swiss francs per share, a premium of more than 30% over Tuesday’s closing price. That would value Credit Suisse at 23 billion francs ($23.6 billion).

“We are not going to respond to an earlier report,” State Street said in a statement. “As we discussed previously, we are focused on our pending acquisition of Brown Brothers Harriman’s investor services business.”

Credit Suisse declined to comment.

Analysts were skeptical.

“I would struggle to see why State Street would be the buyer of a global, full-service investment banking franchise,” said Michael Brown, an analyst at Keefe, Bruyette & Woods. “It goes beyond their core competence as a services and asset management company.”

State Street announced last September that it had agreed to buy the investor services business of investment bank Brown Brothers Harriman & Co for $3.5 billion in cash, strengthening its position in the battle. to become the largest custodian bank in the world. Read more

Jefferies analysts wrote they viewed the combination as “highly unlikely” citing State Street’s pending deal to buy Brown Brothers Harriman’s investor services business and the Swiss bank’s legal and business challenges.

A major US brokerage firm, in a message to its clients, questioned the rationale for any State Street interest in the Swiss bank, citing unclear synergies for the US custodian, as well as the risk of capital costs , job cuts and litigation risks.

Speculation over the deal comes as Credit Suisse issued a third straight quarterly profit warning on Wednesday.

The bank has described 2022 as a “transition” year as it attempts to turn the page on costly scandals that have led to a near-total senior management reshuffle and restructuring aimed at reducing risk-taking, including in its investment bank.

Shares have lost nearly half their value since two of the biggest shocks, the collapse of $10 billion in supply chain finance funds linked to Greensill Capital and a loss of more than $5 billion. dollars on the settlement of transactions by the investment company Archegos, hit the bank in March 2021. read more

The moves have raised questions about whether the flagship Swiss lender, left vulnerable by scandals, could be challenged by investors demanding its dissolution, or whether its falling stock market value makes it the target of a hostile foreign takeover. Read more

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

Separately, sources told Reuters last week that Credit Suisse was in the early stages of weighing options to bolster its capital after a series of losses eroded its financial reserves. Read more

($1 = 0.9739 Swiss francs)

Reporting by Danilo Masoni; Additional reporting by Sinead Carew, Brenna Hughes Neghaiwi and Niket Nishant; Editing by Ira Iosebashvili, Elaine Hardcastle and Richard Chang

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