Credit Suisse (CS), the bank that is now at the forefront of the markets, has a special connection and a little-known but highly relevant presence in two of them. It is a reference shareholder of SIX Group, the manager of the Zurich Stock Exchange, which in turn has been the owner for three years of Bolsas y Mercados Españoles (BME), the company that owns the stock markets of Madrid, Barcelona, Valencia and Bilbao.
This connection with the Spanish stock market infrastructures is articulated in a position on the board of directors of SIX, in addition to the returns in the form of dividends from its 15% stake in the capital, according to the latest available data. This is one of the most relevant assets on CS’s balance sheet that it could turn to in case of need, as it did in October with the 8.6% that remained from Allfunds for around 380 million.
CS’s investment in SIX Group (BME) -which despite being a stock market is not listed and is not subject to the transparency rules of the market itself- would be valued between 700 and 1,000 million euros, after the revaluation of its shares carried out in The last two years. It is part of the sale and recapitalization plan that resumed last year after the 4,000 million euro increase that CS completed in December from Qatari and Saudi investors, who own about 25% of its capital.
The Swiss entity is the second largest partner of the Swiss and Spanish Stock Exchanges behind UBS, which maintains slightly less than 18% of the property. The rest of it is distributed by Swiss savings banks and various foreign entities that operate in the Central European country. Up to 120 financial institutions have some participation, among them, Raiffeisen Schweiz (5.5%), Julius Baer (3.3%) and Zúrcher Kantonalbank (3.3%).
Now its presence in the Spanish-Swiss group of stock market infrastructures may be seen for judgment, according to financial sources to ‘La Información’, because the bank is fighting for its survival and needs to make cash out of any balance. From the Spanish stock market operator they declined to comment on the hypothetical repercussion for the company of this crisis.
Credit Suisse is waiting for its central bank’s public support plan to come to fruition leading to the biggest stock market fall in its history on Wednesday. Default insurance (CDS) on 1-year debt shot up to 3,700 points before the avalanche of investors looking to protect themselves against a potential bankruptcy of the bank like the ones that occurred last week in the US with the SVB.
The 15% stake is distributed among two CS subsidiaries (its fund manager and its Swiss banking subsidiary) with the aim of consuming less regulatory capital, according to the entity. On the other hand, Credit Suisse said last year that it was looking to carry out a ‘spin-off’ around its investment banking division, rescuing the CS First Boston brand with which it was one of the main Wall Street firms. The project suffered a severe setback in March due to deficiencies in regulatory compliance (compliance) that have placed it in the crosshairs of the US Securities and Exchange Commission (SEC) after the late presentation of its 2022 annual report .
Moncloa approves the Swiss operation
Together with UBS, Credit Suisse supported, financed, endorsed and led in 2020, in the midst of a pandemic, the takeover of Bolsas y Mercados Españoles (BME) by the SIX Group with an investment of 2,800 million euros. The two Swiss banks took over both the operations on the stock market and the bridge loan with which the Zurich Stock Exchange acquired those of Madrid and Barcelona.
Paradoxically, the corporate operation had all the blessings of the foreign investment filter of the Government of Pedro Sánchez in the midst of the 2020 pandemic. Only a few months ago, Moncloa had raised the ‘antiopas’ shield, intensifying scrutiny over the so-called straté sectors, telecommunications, technology or industry, among others. But the change of owners of the Spanish stock, debt and derivatives markets had the approval of Minister Nadia Calviño, the CNMV and the CNMC.
Since then, the reference shareholder of SIX Group and BME has been involved in some of the most notorious scandals in the financial sector and has suffered the impact of such relevant collapses as that of the financial company Greensill or Archegos. In addition, Credit Suisse has embarked on several mass layoff schemes and has seen wide cracks in corporate governance open up that have led it to redo its leadership multiple times.
On February 9, the bank presented its 2022 annual results, once again highlighting its problems to be profitable, retain customers both in deposits and in private banking or asset management, a situation that has led it to the difficult position that now goes through Credit Suisse lost 1,320 million Swiss francs (1,337 million euros) in the fourth (October-December) due to the impact of the sale of Allfunds, losses that shot up to 7,300 million in the year.