A marriage of convenience
Credit Suisse, an institution since 1856, is set to be taken over by bitter rival UBS in a deal worth ~$3bn, after a chaotic weekend of offers, counter-offers and matchmaking from Swiss regulators.
The deal crystallizes an enormous loss for any Credit Suisse shareholders and marks the end of intense competition between the two pillars of Swiss finance — a one-sided rivalry in recent years, as Credit Suisse rocked from crisis to crisis.
Credit sus
A string of recent controversies turned Credit Suisse from an underperforming bank into a ticking time bomb, starting with a 2019 spying scandal in which the bank admitted to hiring private detectives to follow former staff, shaking confidence in the usually oh-so-discreet Swiss banking sector.
If that predominantly harmed Credit Suisse's reputation, other scandals hurt its bottom line as the firm was found to be deep in both the Greensill Capital and Archegos Capital blow-ups. The latter turned out to be a $5bn+ mistake, essentially wiping out a decade’s worth of net profits at the bank.
Scandals followed over the CEO's breach of COVID rules, a leak of data that reportedly showed the firm served human rights abusers and corrupt politicians, and a guilty verdict in a cocaine cash laundering case.
With trading losses, mounting litigation costs and clients of the firm leaving in droves, Credit Suisse reported its largest ever annual loss — leaving it more exposed than ever to a crisis like that of the last month.
It has been 0 days since the last bank blow-up
This is the largest tie-up of systemically important banks since the Global Financial Crisis, and comes less than 2 weeks after the collapse of SVB and Signature Bank in the US, prompting coordinated action from global central banks this morning.
