The bank is in big trouble. The stake in Greensill and Archegos Capital has resulted in huge losses. Just last week there was a loss of more than 4 billion Swiss francs (3.17 billion pounds sterling) and an emergency procurement of nearly two billion Swiss francs was initiated. Last February, the former managing director Tidjane Thiam resigned after a spy scandal and a dispute with the outgoing chairman Urs Rohner. There is seldom a dull moment.
If you’re looking for corporate high jinks, Credit Suisse can deliver them in spades. The problem is that nobody at a Swiss bank wants that. Safe, slightly boring, but well-managed are the traits that should be associated with any of their leading players – but it will be a long time before Credit Suisse regains a reputation that includes any of those traits.
It remains to be seen whether Horta-Osório can change that. There is no question that he restored Lloyds to resilience after the 2008 and 2009 financial crashes (even if it wasn’t reflected in the share price). Maybe he can and maybe he can’t. In the meantime, however, one of his UK rivals should seize a moment of weakness and place a bid.
Sure, a lot of people will dismiss this as a fool. After all, bank mergers don’t have a good reputation. Lloyds was nearly destroyed by the HBOS acquisition, while RBS, which was again renamed NatWest, has not recovered from its bid for Dutch company ABN Amro a decade later.
But they don’t have to be a disaster. Barclays’ purchase of the remains of Lehman Brothers after the last crash was a huge success, making the bank a major player on Wall Street for the first time.
The takeover of the British Midland Bank by HSBC has already turned it from an Asian to a global player and has been consistently successful. In truth, as is so often the case in business, an acquisition may or may not work. It depends on the business, the moment and the price. And right now there are three reasons why buying Credit Suisse would make sense for one of the UK banks.
First, it has a unique franchise in one of the oldest financial markets in the world. The private banking, wealth management and asset management units are huge. It is the second largest bank in Switzerland, one of the largest financial markets in the world. It has a depth of experience and contacts in global commercial banking that few others can match. All of these are valuable assets that took more than a century to create, and they still have a great deal of value despite the current problems.
Next, there is a natural correspondence between UK and Swiss finance, and both the UK and Switzerland are now more than ever major European financial centers (Zurich and Geneva are bigger rivals to London than Paris or Frankfurt) and outside the European Union. A bank that spread across both would create a real European champion.
After all, it’s a once in a lifetime bargain. Amid a wave of scandals, Credit Suisse share price is at a 25-year low: on Friday, the shares traded for less than 10 Swiss francs, compared with more than 20 in April 1995. If you don’t buy them now, that’s the die Chance won’t come back.