State Street Corporation (NYSE:STT) has denied it is in talks to buy Credit Suisse Group AG (NYSE:CS).
Credit Suisse shares yesterday fell to their lowest levels in more than three decades but steadied later in the day only to dip again when the US asset manager dismissed the story.
The investment bank slid 6.3% to Sfr6.18 immediately on the news, bringing shares close to their lowest level since 1989.
State Street, which first declined to comment on the speculation, later clarified it is not seeking to acquire or merge with Credit Suisse and any market rumours were unfounded.
The US bank appeared to have taken a 7.5% holding in Credit Suisse as of Wednesday, but the stake disappeared on Thursday, and may have been a filing error according to experts.
In a statement, the US firm said, "Although we have a longstanding policy of not commenting on speculation, we believe a response to these reports is now justified."
It noted it was still in the process of completing its US$3.5bn acquisition of Brown Brothers Harriman's custody and asset servicing unit.
Investors appeared to be concerned that it wasn't an outright denial, as shares of the US bank fell and closed Thursday down 1.13% to US$68.14.
State Street's stocks have plummeted about 25% this year due to market volatility, which is hurting its exchange-traded fund business. State Street's asset management unit sponsors the popular SPDR family of ETFs.
Analysts said they saw little benefit in State Street buying Credit Suisse, but suggested a possible combination of the banks' asset management divisions might work.
While State Street Global Advisors specialises in index funds and exchange-traded funds, Credit Suisse Asset Management offers higher-margin active products.
When asked about the rumoured buyout, Credit Suisse chief executive Thomas Gottstein said, "We never comment on rumours. My father once gave me a piece of advice: for really stupid questions, you’d rather not comment at all. I will listen to my father’s advice in this instance."
The Swiss bank is reportedly considering removing Gottstein as early as this year as the CEO is said to be losing the confidence of some board members.
Credit Suisse's chairman Antonio Horta-Osorio also stepped down mid-January after he broke the company's own Covid-related travel rules.
Shares tank
Credit Suisse's shares have halved since their peak in March last year, hurt by major financial and reputational losses stemming from the troubles of the Greensill Finance fund and the collapse of Archegos.
The company's two years under the leadership of chief Gottstein have seen the US$5.5bn hit from Archegos, the collapse of partner Greensill, and a string of profit warnings that eroded investor confidence weakened key businesses and prompted an exodus of key employees.
After the Swiss bank gave its sixth profit warning in seven quarters on June 8, its shares plummeted.
The bank expects to lose money both at the group level and at its investment bank in the second quarter.
When chief Gottstein was asked how the bank plans to emerge from three quarters of losses, he said the bank was committed to hitting or potentially coming under its Sfr17bn cost target for the year, and would accelerate some savings initiatives, but would not compromise risk and compliance.
The Swiss bank is also looking to cut headcount across different divisions, including investment banking and wealth management.
Credit Suisse employed more than 50,000 people end-2021.
It recently revamped its top management, announcing that its chief financial officer, legal counsel, and head of Asia would either step down or depart the company.
The global private bank has been undergoing periodic restructuring since the financial crisis a decade ago, but has remained ensnared by litigation and regulatory probes.