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Credit Suisse Dips on Trading View, Gains on State Street Claims
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Credit Suisse Group AG provided a trading update, following which, its shares declined nearly 1% on the NYSE. Yesterday, the bank warned of a potential second-quarter loss as volatility hits its investment banking division.
The Swiss lender stated, “Market conditions so far in the second quarter of 2022 have remained challenging. The combination of the current geopolitical situation following Russia’s invasion of Ukraine, significant monetary tightening by major central banks in response to the substantial increase in inflation and the unwind of COVID-related stimulus measures have resulted in continued heightened market volatility, weak customer flows and ongoing client deleveraging, notably in the APAC region.”
Credit Suisse added, “Within the Investment Bank, while our advisory revenues have been resilient and GTS revenues, compared to last year, have benefited from the higher volatility, albeit with an uneven performance, the impact of these conditions, together with continued low levels of capital markets issuance and the widening in credit spreads, have depressed the financial performance of this division in April and May and are likely to lead to a loss for this division as well as a loss for the Group in the second quarter of 2022.”
Notably, CS has spent most of the last one and a half years struggling to emerge from the hits resulting from the collapse of Archegos Capital Management and Greensill Capital. Its shares have been falling, witnessing the worst decline among other major European banks in the last eight years.
After providing the trading update, the Zurich-based lender said that it is considering a fresh round of job cuts, which is part of a renewed push to cut costs.
The bank said, “As we look forward to the second half, the year 2022 will remain one of transition for Credit Suisse. Given the economic and market environment, we are accelerating our cost initiatives across the Group with the aim of maximizing savings from 2023 onwards.”
After witnessing a decline in share price following the trading update, Credit Suisse witnessed some reversal in stock price yesterday afternoon when Swiss blog Inside Paradeplatz reported that Credit Suisse could be taken over by State Street Corporation (STT - Free Report) .
However, State Street declined to comment on the report, following which its shares lost 5.4% in yesterday’s trading, the most in almost two months.
While some traders have been claiming that State Street is planning a takeover bid for the troubled Swiss lender, others within the industry doubt the claim.
State Street said, “We are not going to respond to an earlier news report. As we have previously discussed, we are focused on our pending acquisition of Brown Brothers Harriman’s Investors Services business.”
Moreover, Ken Usdin, an analyst at Jefferies Financial Group, commented, “For many reasons, we see this combination as highly unlikely, based on capital levels, State Street’s pending BBH deal, and Credit Suisse’s plethora of ongoing legal/business challenges.”
Over the past year, shares of STT have lost 17.4%. CS shares have lost 35.6% on the NYSE over the same period.
Image Source: Zacks Investment Research
Currently, both State Street and Credit Suisse carry a Zacks Rank #5 (Strong Sell).
Franklin Resources, Inc. (BEN - Free Report) , which operates as Franklin Templeton, entered an agreement with The Bank of New York Mellon Corporation (BK - Free Report) to acquire BNY Alcentra Group Holdings, Inc. from the latter. The closing of the deal, subject to customary conditions, including certain regulatory approvals, is expected early in the first quarter of 2023.
Through the acquisition, Franklin Templeton’s U.S. alternative credit specialist investment manager, Benefit Street Partners, will be able to expand its alternative credit capabilities and presence in Europe, doubling its AUM to $77 billion globally.
Upon the deal closure, BNY Mellon Investment Management is expected to continue to offer Alcentra’s capabilities in BNY Mellon’s sub-advised funds and select regions via its global distribution platform, and will provide Alcentra with ongoing asset servicing support.
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Credit Suisse Dips on Trading View, Gains on State Street Claims
Credit Suisse Group AG provided a trading update, following which, its shares declined nearly 1% on the NYSE. Yesterday, the bank warned of a potential second-quarter loss as volatility hits its investment banking division.
The Swiss lender stated, “Market conditions so far in the second quarter of 2022 have remained challenging. The combination of the current geopolitical situation following Russia’s invasion of Ukraine, significant monetary tightening by major central banks in response to the substantial increase in inflation and the unwind of COVID-related stimulus measures have resulted in continued heightened market volatility, weak customer flows and ongoing client deleveraging, notably in the APAC region.”
Credit Suisse added, “Within the Investment Bank, while our advisory revenues have been resilient and GTS revenues, compared to last year, have benefited from the higher volatility, albeit with an uneven performance, the impact of these conditions, together with continued low levels of capital markets issuance and the widening in credit spreads, have depressed the financial performance of this division in April and May and are likely to lead to a loss for this division as well as a loss for the Group in the second quarter of 2022.”
Notably, CS has spent most of the last one and a half years struggling to emerge from the hits resulting from the collapse of Archegos Capital Management and Greensill Capital. Its shares have been falling, witnessing the worst decline among other major European banks in the last eight years.
After providing the trading update, the Zurich-based lender said that it is considering a fresh round of job cuts, which is part of a renewed push to cut costs.
The bank said, “As we look forward to the second half, the year 2022 will remain one of transition for Credit Suisse. Given the economic and market environment, we are accelerating our cost initiatives across the Group with the aim of maximizing savings from 2023 onwards.”
After witnessing a decline in share price following the trading update, Credit Suisse witnessed some reversal in stock price yesterday afternoon when Swiss blog Inside Paradeplatz reported that Credit Suisse could be taken over by State Street Corporation (STT - Free Report) .
However, State Street declined to comment on the report, following which its shares lost 5.4% in yesterday’s trading, the most in almost two months.
While some traders have been claiming that State Street is planning a takeover bid for the troubled Swiss lender, others within the industry doubt the claim.
State Street said, “We are not going to respond to an earlier news report. As we have previously discussed, we are focused on our pending acquisition of Brown Brothers Harriman’s Investors Services business.”
Moreover, Ken Usdin, an analyst at Jefferies Financial Group, commented, “For many reasons, we see this combination as highly unlikely, based on capital levels, State Street’s pending BBH deal, and Credit Suisse’s plethora of ongoing legal/business challenges.”
Over the past year, shares of STT have lost 17.4%. CS shares have lost 35.6% on the NYSE over the same period.
Image Source: Zacks Investment Research
Currently, both State Street and Credit Suisse carry a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inorganic Growth Moves by Other Banks
Franklin Resources, Inc. (BEN - Free Report) , which operates as Franklin Templeton, entered an agreement with The Bank of New York Mellon Corporation (BK - Free Report) to acquire BNY Alcentra Group Holdings, Inc. from the latter. The closing of the deal, subject to customary conditions, including certain regulatory approvals, is expected early in the first quarter of 2023.
Through the acquisition, Franklin Templeton’s U.S. alternative credit specialist investment manager, Benefit Street Partners, will be able to expand its alternative credit capabilities and presence in Europe, doubling its AUM to $77 billion globally.
Upon the deal closure, BNY Mellon Investment Management is expected to continue to offer Alcentra’s capabilities in BNY Mellon’s sub-advised funds and select regions via its global distribution platform, and will provide Alcentra with ongoing asset servicing support.