State Street knocks down Credit Suisse takeover rumours

Credit Suisse logo, as seen in Zurich Oerlikon © Keystone / Michael Buholzer

US financial giant State Street denied it was in talks to acquire Credit Suisse, knocking back a report that it was pursuing the troubled Zurich-based lender.

This content was published on June 10, 2022 - 18:06
Owen Walker in London and Brooke Masters in New York, Financial Times

The US custody bank on Wednesday had initially declined to comment on a report from a Swiss blog that it was preparing an offer, exacerbating sharp moves in the shares of both lenders.

In a statement the following day, State Street said it “is not pursuing an acquisition of, or any other business combination with, Credit Suisse. There is no basis to the continuing market rumours. Although we have a longstanding company policy of not commenting on such speculation, we feel a response to these reports is now warranted in this instance.”

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Earlier in the day, Credit Suisse chief executive Thomas Gottstein was asked about the report at the Goldman Sachs European Financials Conference in Rome. He replied: “We never comment on rumours. My father once gave me a piece of advice: for really stupid questions, you’d rather not comment at all. I will listen to my father’s advice in this instance.”

Shares affected

Shares in Credit Suisse were down nearly 6% after both companies’ statements. State Street shares jumped briefly after its denial and were up almost 1% in afternoon trading in New York.

A day earlier, Credit Suisse stock hit a 30-year low of CHF6.20 ($6.33) following its third profit warning since January, but jolted up after the report of the takeover on Swiss blog Inside Paradeplatz, finishing Wednesday in positive territory.

Inside Paradeplatz cited a single source who said State Street was lining up a CHF9-per-share offer for Credit Suisse.

Despite initially declining to comment, the US lender noted that it was still in the process of finalising its $3.5 billion purchase of Brown Brothers Harriman’s custody and asset servicing business. Its shares fell 5.5% on Wednesday, with investors apparently concerned that it was less than an outright denial.

Analysts’ views

Analysts said they saw little benefit from State Street buying Credit Suisse, but they did flag the potential of a possible combination of the banks’ asset management divisions.

State Street Global Advisors specialises in index funds and exchange traded funds, while Credit Suisse Asset Management focuses on higher-margin active products.

Asked about potential ventures involving CSAM during the Goldman Sachs event, Gottstein said there were no plans and that the asset management business was one of the bank’s four core divisions.

Gottstein was also asked about the bank’s prospects of emerging from three straight quarters of losses.

He said the bank was committed to hitting or potentially coming under its CHF17 billion cost target for the year, with certain savings initiatives to be accelerated, though he added the bank would not make any concessions on risk and compliance.

Copyright The Financial Times Limited 2022

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