Credit Suisse shares spike on reported State Street takeover interest

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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

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MILAN, June 8 (Reuters) – Shares in Credit Suisse (CSGN.S) turned sharply higher on Wednesday afternoon, with traders citing an Inside Paradeplatz report that U.S-based State Street (STT.N) 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 (.STOXX) was down 0.7%.

The stock dropped close to its lowest in over 20 years during the session after the company warned of a likely second-quarter loss as volatility hit its investment bank. read more

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Shares in State Street (STT.N)fell more than 5%, underperforming the wider market.

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 ($23.6 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.

“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, in a message to clients, questioned 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 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. read more

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. read more

($1 = 0.9739 Swiss francs)

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Reporting by Danilo Masoni; Additional reporting by Niket Nishant; Editing by Ira Iosebashvili, Elaine Hardcastle and Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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