Credit Suisse shares spike on reported State Street takeover interest By Reuters

© Reuters. FILE PHOTO: The logo of Swiss bank Credit Suisse is seen at its headquarters at the Paradeplatz square in Zurich, Switzerland October 1, 2019. REUTERS/Arnd Wiegmann

By Danilo Masoni

MILAN (Reuters) -Shares in Credit Suisse turned sharply higher in afternoon trade on Wednesday with traders citing an Inside Paradeplatz report https://insideparadeplatz.ch/2022/06/08/state-street-will-offenbar-cs-uebernehmen saying that U.S-based State Street (NYSE:STT) is planning a takeover bid for the troubled lender, though some in the industry cast doubt on the claim.

Credit Suisse shares ended up 3.8% in Zurich after jumping following the report in the Swiss financial blog. From lows hit earlier in the day, the shares were up more than 14%. The broader European stock market was down 0.7%.

The Swiss bank's shares had earlier in the session been close to their lowest in over 20 years as investors dumped the stock after the company warned of a likely second-quarter loss as volatility hit its investment bank.

Shares in State Street were down around 2%, underperforming the wider market.

Citing one unidentified source, Inside Paradeplatz said State Street would price its bid at 9 Swiss francs a share, a premium of more than 30% to Tuesday's closing price. That would value Credit Suisse at 23 billion francs ($23.6 billion).

Credit Suisse declined to comment and State Street did not immediately respond to a request for comment.

Analysts were sceptical.

"For many reasons, we see this combination as highly unlikely," wrote Jefferies analysts, citing State Street's pending deal to buy Brown Brothers Harriman's investor services business and the Swiss bank's legal/business challenges.

A top U.S. brokerage also questioned in a message to clients the rationale of any State Street interest for the Swiss bank, citing unclear synergies for the U.S. custodian, along with the risk of capital costs, job cuts and litigation risks.

The deal speculation comes as Credit Suisse on Wednesday delivered a third consecutive quarterly profit warning.

The bank has described 2022 as a "transition" year in which it is trying to turn the page on costly scandals that brought a near total reshuffle of top management and a restructuring seeking to curtail risk-taking, particularly in its investment bank.

Beyond the challenges of the macroeconomic environment, Credit Suisse is contending with an overhaul after a series of setbacks that have shaken investor confidence.

Top-ten shareholder Artisan Partners (NYSE:APAM) told Reuters last month that Credit Suisse should start looking for a new CEO, the first major investor to publicly call for such a move.

Separately, sources told Reuters last week that Credit Suisse is in the early stages of weighing options to bolster its capital after a string of losses eroded its financial buffers.

($1 = 0.9739 Swiss francs)

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