A tale of 2 Swiss banks: A marriage of (regulatory) convenience

3/19/23 8:00PM

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.

Max Knoblauch20h

Paramount reportedly offers concessions to resolve multistate antitrust investigation

Paramount has reportedly offered up some concessions in an effort to prevent an antitrust lawsuit by California and about 10 other states, according to Bloomberg reporting on Monday.

Reuters first reported on the potential suit from a group of unnamed states last week, which could throw a wrench in Paramount’s plans to buy rival Warner Bros. Discovery in a Hollywood megamerger.

The list of concessions is unknown, though Bloomberg previously reported that Paramount is open to divesting some of its kids TV assets to appease EU regulators.

Late last month, reports said US regulators appeared likely to approve the $110 billion merger, following a meeting between Paramount CEO David Ellison and DOJ antitrust staffers.

Paramount Offers Concessions to Head Off State Antitrust Lawsuit

The list of concessions is unknown, though Bloomberg previously reported that Paramount is open to divesting some of its kids TV assets to appease EU regulators.

Late last month, reports said US regulators appeared likely to approve the $110 billion merger, following a meeting between Paramount CEO David Ellison and DOJ antitrust staffers.

$98B ⛽

Max Knoblauch6/8/26

The IATA released its latest financial outlook for the airline industry over the weekend, forecasting a $98 billion jump in the sector’s collective fuel bill. The world’s largest trade group representing airlines expects the oil spike to halve profits by 49% from last year to $23 billion.

The group also expects profit margins to halve year over year, falling from 2025’s 4.2% to 2%. Still, revenue is expected to climb to $1.17 trillion from $1.07 trillion.

A surge in the cost of jet fuel has rocked US and global airlines this year, leading Delta Air Lines, United Airlines, American Airlines, Southwest Airlines, JetBlue, and others to raise fares and ancillary charges like bag fees. Low-cost carriers, which operate on smaller margins, have been squeezed the hardest, resulting in Spirit’s shutdown.

“It’s a tough year for all airlines, especially those whose balance sheets had not yet recovered from COVID. And, of course, for those operating in the Gulf,” said IATA Director General Willie Walsh, who added that demand is holding up and about half of passengers expect to spend more on travel this year. “That bodes well for a strong northern summer peak season. The big unknown is how long travelers and shippers can tolerate the higher costs of connectivity.”

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GM has reportedly rehired more than 100 former Cruise employees, 18 months after shuttering the robotaxi unit

GM has rehired more than 100 employees it let go early last year when it shuttered Cruise, its former robotaxi business, according to reporting by The Information.

The hiring spree, which also includes employees from Nvidia and Uber, is geared toward ramping up GM’s plans for personal-use self-driving vehicles and not robotaxis. The former had been the focus of Cruise, prior to GM shuttering it in 2024.

Reporting last fall revealed that GM was attempting to rehire some former Cruise employees, but the scope of that effort wasn’t clear. More than 1,000 employees were laid off when the automaker scrapped Cruise, which it invested $10 billion into.

Google’s Waymo, Cruise’s former chief rival, is now worth $126 billion after a $16 billion funding round earlier this year. The company says it’s serving 500,000 paid robotaxi rides per week in the US.

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