MILAN: Shares in Credit Suisse turned sharply higher yesterday afternoon, with traders citing an Inside Paradeplatz report that US-based State Street is planning a takeover bid for the troubled lender, though some in the industry doubt 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 stock had dropped close to its lowest in over 20 years earlier in the session after the company warned of a likely second-quarter loss as volatility hit its investment bank.
In the US, shares of State Street finished down 5.4%. US-listed shares of Credit Suisse closed down 1%.
Citing one unidentified source, Inside Paradeplatz said State Street would bid 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 (RM112.2 billion).
“We are not going to respond to an earlier news report,” State Street said in a statement. “As we have previously discussed, we are focused on our pending acquisition of Brown Brothers Harriman’s Investors Services business.”
Credit Suisse declined to comment.
Analysts were sceptical.
“I’d struggle to see why State Street would be the buyer of a global full service investment bank franchise,” said Michael Brown, analyst at Keefe, Bruyette & Woods. “It extends beyond their core competency as an asset servicing and asset management firm.”
State Street announced last September that it had agreed to buy investment bank Brown Brothers Harriman & Co's investor services business for US$3.5 billion (RM15.37 billion) in cash, strengthening its hand in the battle to be the world’s biggest custodian bank.
Jefferies analysts wrote that they saw 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 top US brokerage, in a message to clients, questioned the rationale of any State Street interest for the Swiss bank, citing unclear synergies for the US custodian, along with the risk of capital costs, job cuts and litigation risks.
The deal speculation comes as Credit Suisse yesterday delivered a third consecutive quarterly profit warning. – Reuters
