Banking Giant’s Future Looks to Be Hanging in the Balance

Credit Suisse

Dismissing rumors of a potential takeover, BlackRock Inc. (NYSE:BLK) has emphatically denied a recent report suggesting that it is planning to launch an acquisition bid for embattled Credit Suisse (NYSE:CS).

A BlackRock spokesperson declared to CNBC Saturday morning that the $8.6 trillion asset manager had no plans or interest in acquiring the Swiss lender entirely or partially.

The statement comes after the Financial Times (FT) reported that the American asset management company was working on a proposal to acquire the Swiss bank, citing five sources familiar with the situation.

UBS Group AG (NYSE:UBS) has also been suggested as a potential buyer. On Friday, the FT suggested that the Swiss banking giant is in discussions to take over all or part of Credit Suisse. UBS has declined to comment on the report.

Last week, after the Swiss central bank offered a $54 billion lifeline to the struggling Credit Suisse, investors remained unconvinced of its ability to sustain future operations.

What’s more, over the last few days- Credit Suisse’s stock experienced the most severe drop since the outbreak of COVID-19, with shares now printing 35% lower on a month-over-month basis.

At last check, CS was trading 6.94% lower to $2.01 per share.

With its fate hanging in the balance, only time will tell if the Zurich-based Credit Suisse can make a successful recovery.

The latest dip in stock price accelerated after the Saudi National Bank, which holds a 9.8% stake in the beleaguered bank, announced their refusal to inject any more funds.

“Absolutely not, for many reasons,” Saudi National Bank chairman Ammar Al Khudairy told Bloomberg.

The collapse of Silicon Valley Bank, the biggest U.S. banking failure since Lehman, and the closure of New York-based Signature Bank have raised fears about the international banking industry as a whole.

Credit Suisse has been undergoing a deep structural overhaul in order to regain stability and profitability. Unfortunately, the bank has recently encountered numerous scandals and controversies, such as its involvement with Greensill Capital that caused $1.7 billion in damages.

Shortly after, the Swiss investment bank was subject to another staggering loss – $5.5 billion to be exact- after hedge fund Archegos Capital chose the default option. Both incidents undermine the bank’s recovery efforts.

Due to these and other controversies, investor and customer trust was drastically impacted – causing the bank to lose billions in deposits.

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