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Credit Suisse taken over - what's next? [Closer to the Exchange]

Credit Suisse taken over - what's next? [Closer to the Exchange]

created Forex Club22 March 2023

The collapse of Silicon Valley Bank echoes in the markets. In just the last two weeks, more than USD 95 billion has evaporated from the American banking sector, and regional banks such as First Republic, Truist and PNC Bank have lost the most in terms of market capitalization. The controversial takeover of Credit Suisse by UBS shows, however, that the scale of problems may be greater than previously thought.

Credit Suisse acquired

UBS, Switzerland's largest bank, acquired Credit Suisse for CHF 3 billion, paying just CHF 0,76 per share. This means that Credit Suisse's largest shareholder, Saudi National Bank, will lose about a billion Swiss francs on the deal. Existing Credit Suisse shareholders will receive one UBS share in exchange for 22,48 CS shares, which can be called a considerable loss. However, the situation of bondholders of the acquired bank looks even worse – especially those holding AT1 bonds.

AT1 bonds are a form of debt that counts towards a bank's regulatory capital and helps meet regulatory requirements. If the bank fails to meet these requirements, the securities are converted into shares. During the acquisition of Credit Suisse, a decision was made to redemption of over USD 17 billion worth of AT1 bondswhich led to another wave of panic in the banking sector. Similar debt securities were issued by other institutions - HSBC, BNP Paribas, Barclays or UBS itself - and their value reaches tens of billions of dollars.

Tuesday's session will not be considered successful by the shareholders of CD Projekt either. The games producer's shares lost over 10,9% yesterday, and the first hours of Wednesday's trading bring a continuation of declines. Is the panic on CDR stocks justified? These and other questions are answered by XTB analyst Maciej Kietliński.

In the latest webinar:

  • Why all the fuss about Credit Suisse?
  • Which banks are potentially most at risk?
  • CD Projekt - 1 out of 5 witchers written off?

About the host

Maciej KietlinskiMaciej Kietlinski - professionally involved in the analysis of capital markets since 2017. He gained the necessary experience in such renowned companies as BGŻ BNP Paribas or Noble Securities. In his last place of work, he specialized in the analysis of listed companies from the dynamically developing gaming sector. He also gave stock exchange comments on TV Biznes24, or and for Forbes, Reuters, Parkiet, Gazeta Wyborcza and PAP Biznes. Kietliński also focuses on development, which is why he is currently working on a doctoral dissertation in economics at the Warsaw School of Economics. CIIA, Investment Advisor or Stock Broker.

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