Credit Suisse CEO dismisses State Street deal rumors
Credit Suisse Group AG Chief Executive Officer Thomas Gottstein batted away questions on whether the bank is a takeover target and said he’s still holding out hope for a profitable second quarter.
Swiss blog Inside Paradeplatz on Wednesday caused a firestorm after it reported that State Street Corp. could make a bid for Credit Suisse at 9 francs a share, citing a single person..
“My father once gave me a piece of advice: for really stupid questions you’d rather not comment at all,” Gottstein said after he was asked by an audience member at a Goldman Sachs conference whether there was any merit to the report. “So I think I will listen to my father’s advice in this instance.”
State Street, one of the largest fund administrators in Luxembourg, also refused to comment on the report.
“We are not going to respond to an earlier news report,” State Street said in an email on Wednesday. “As we have previously discussed, we are focused on our pending acquisition of Brown Brothers Harriman’s Investors Services business.”
The blog report came on the same day that Credit Suisse posted its sixth profit warning in seven quarters, putting further pressure on Gottstein as he seeks to take the bank past the tumult of the Archegos and Greensill Capital scandals.
He said the bank is “bleeding” in equities trading after its exit from the prime brokerage business at the center of Archegos and is seeing weak credit trading revenues. Gottstein said the business of advising on mergers and acquisitions is actually outperforming peers.
“I haven’t given up on a positive number for the group, but we wanted to be appropriately prudent on this,” Gottstein said in reference to the profit warning, which the bank on Wednesday said was driven by poor results at the investment bank.
Credit Suisse stock has fallen 73% over the past eight years, the worst decline among major European banks, and it now trades at a 60% discount to book value. The Zurich-based lender is considering a fresh round of job cuts, part of a renewed push to slash costs after warning of a second-quarter loss, Bloomberg reported.
Gottstein said that there are areas where the bank could implement cost savings faster, including in its IT and technology operations, as well as in some of the front offices that house its bankers and relationship managers.
“We definitely still have some more firepower to look at costs,” he said.
While rival banks have said in the past week that their traders are navigating the wild markets well, Credit Suisse’s trading and dealmaking unit has been hit by widening credit spreads and a drop in bond and stock issuance. That’s an echo of the first quarter, when most major European banks saw trading revenue climb but Credit Suisse saw a 50% drop.
The lender has said that 2022 will be a year of transition as it reduces risk at the investment bank while shifting more resources to wealth management. Gottstein is giving an investor “deep dive” on June 28 where the bank said it will update on its cost saving plans.
©2022 Bloomberg L.P.