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Credit Suisse Discussing A New Look Or Even Merger For Fear Of Predators - Reports

Credit Suisse Discussing A New Look Or Even Merger For Fear Of Predators - Reports
A potential merger with rival UBS for the scandal-hit Swiss bank Credit Suisse are included in a possible overhaul plan for the company and there is increasing pressure on the bank’s top management, said reports quoting information three people familiar with the matter.
According to executives of the bank, there can be pressure on the company from investors who could challenge the bank and demand its break up as the flagship Swiss lender has been left vulnerable by scandals. There are also concerns that the bank could be a target for a foreign hostile takeover because of its shrinking value at the stock market.
A strategic review in late April was announced by the banks new chairman, Antonio Horta-Osorio, when he had told investors that he would take time in coming to hard decisions that lay ahead.
According to reports, the senior management of the bank are scheduled to meet next week and restructuring proposals are set to be examined by the firm’s top executives in early July.
In the rush to unwind trades by family office Archegos, the bank took a more than $5 billion hit forcing the Swiss bank to conduct a review its business. According to the reports, the bank potentially is poised to face a slew of legal action against it for helping clients to make investments of $10 billion in bonds that were issued by the now collapsed supply chain finance firm Greensill Capital.
Since early March, when its issues with Greensill were exposed, there has been more than 25 per cent drop in the values of the shares of the bank.
"Credit Suisse needs a merger deal right away," according to a report published by the news agency Reuters quoting a person with knowledge of the bank's thinking. "There is growing concern in Zurich that activist investors will go after them if they stand still," the source reportedly said.
Measures such as the spinning off its local Swiss bank while also preparing the rest of businesses of the bank for a merger were also debated by some executives of the lender, claimed reports. The executives of the bank have also considered scaling back the investment banking unit or selling off of its asset management business, according ot reports.
Reports also said that another option was also selling of the lender’s investment bank in the United States.
The reports however also cautioned that while the discussions are ongoing and are in full swing, the bank has not yet come to any final decision as the management discussions on any restructuring are only in their preliminary stages.
No comments on the issue were available from Credit Suisse and UBS.
The standing of the bank with customers and in Switzerland has hit a low ebb and therefore it is important that a new-look Credit Suisse is developed by the management of the bank.
Following the Archegos incident, enforcement proceedings against Credit Suisse had been opened by it, said Swiss supervisor FINMA in April, and had then also said that the risk management shortcomings of the bank would also be investigated by the body.

Christopher J. Mitchell

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