Credit Suisse negotiates sale of stake in Verde – 03/16/2023 – Market

In the midst of the financial crisis that led the global group’s shares traded abroad to sink by around 25% in the trading session on Wednesday (15) —a value that recovered this Thursday morning—, Credit Suisse in Brazil announced that it was in talks which may result in the sale of a stake it holds in Verde Asset Management, owned by the renowned Luis Stuhlberger.

“Lumina Capital Management, Verde Asset Management and Credit Suisse are negotiating an agreement to enable Lumina Capital to acquire an equity stake in Verde Asset”, says a note released by the Swiss bank.

Lumina Capital, an investment house focused on the private credit market, which has Daniel Goldberg as one of its main partners, is expected to acquire a stake held by Credit Suisse in Verde, but with the bank still maintaining a stake in the fund manager.

“No transaction has yet been completed, and talks are ongoing. When and if completed, any transaction will involve the continuation of the partnership between Credit Suisse and Verde Asset Management, including with respect to the distribution of Verde’s funds.”

With around BRL 30 billion in assets under management, Verde Asset was founded in mid-2015 by a team from the CSHG (Credit Suisse Hedging-Griffo). In the partners’ exit agreement, CSHG maintained an equity stake in Verde Asset, led by Stuhlberger, who began his career in 1981 at the Hedging-Griffo brokerage, and which, in 2007, had control acquired by Credit Suisse.

The announcement about the negotiations comes in the wake of a crisis that hit Credit Suisse on a global scale in recent days, after the bank disclosed distortions in the balance sheet and the need for a billionaire capital injection, with investors fearful of its financial health. of the bank and with a potential risk of contagion to the wider financial sector.

The news about the bank comes at a time of weakness for the global banking sector, in the wake of the collapse of the SVB (Silicon Valley Bank) last week. The bank focused on the startup sector was hard hit by the increase in interest rates by the Fed (Federal Reserve, US central bank), which caused billionaire losses for the portfolio allocated to long-term US government bonds.

Analysts say it is still difficult to make a precise assessment of the impacts that the crisis at the headquarters may have on the Brazilian unit of Credit Suisse and on customers in the country for the time being, but they estimate that the news coming from Switzerland is not positive for operations bank global.

According to Luis Miguel Santacreu, a bank analyst at Austin Rating, the biggest impact that has already materialized is related to the image of Credit Suisse, which was badly damaged after the episode.

“[A crise] should have effects on business internally, and of course investors will be more afraid of transacting with Credit Suisse”, says Santacreu, adding that, in a more extreme scenario, depending on the evolution of events abroad, he does not rule out the possibility for the bank to sell operations in the country.

A report published this Thursday (16) by Reuters indicates that Credit Suisse sought to calm customers in Brazil, noting that the bank’s capital structure remains solid and seeking to avoid comparisons with the SVB.

In a PowerPoint presentation in Portuguese, the second largest Swiss bank cited the institution’s global indicators, such as BRL 7.5 trillion in assets under management, and stated that its capital structure remains resilient. “The balance sheet position is even more solid”, highlighted the institution in the presentation.

Despite the delicate situation of Credit Suisse, its shares have a session of strong price recovery this Thursday, after the central bank of Switzerland indicated financial support to re-establish the bank’s operations.

The shares advanced more than 20% on the Zurich Stock Exchange, after Credit Suisse announced that it will borrow about US$ 54 billion (50 billion Swiss francs, or R$ 284 billion) from the Swiss National Bank (SNB, the central bank of Switzerland), in a move it called “decisive action” to shore up its liquidity. The SNB had anticipated that it could help Credit financially if needed.

X-RAY | CREDIT SUISSE

Founded in 1856, Credit Suisse is headquartered in Zurich and is Switzerland’s second-largest bank after rival UBS. The bank has approximately 50,500 employees globally, working in the areas of investment banking, resource and wealth management. In 2022, it posted an annual loss of approximately 7.3 billion Swiss francs ($7.9 billion; R$41.3 billion).

With Reuters and AFP