UBS Group, Switzerland’s largest bank, has offered to buy rival Credit Suisse Group in a deal that could be announced Sunday evening, media reports say. Swiss regulators want an agreement before the markets open on Monday for fear that Credit Suisse’s alarmingly fast deterioration could trigger another selloff.
According to the Financial Times, the deal will see UBS pay up to US$1-billion for Credit Suisse, whose crisis of confidence accelerated last week when California’s Silicon Valley Bank imploded virtually overnight, shattering the nerves of bank equity and bond investors everywhere.
The deal will essentially wipe out Credit Suisse shareholders. The FT says that UBS is to pay CHF0.25 a share for Credit Suisse in the form of UBS stock, a small fraction of Credit Suisse’s Friday closing price of CHF1.86.
The takeover was propelled by the Swiss National Bank and Finma, the country’s financial services regulator. Various media outlets reported that the situation was fast-moving and fluid, suggesting that the terms of the deal could change throughout the day.
If the takeover happens, it will spell the end of more than a century and a half of independence for Credit Suisse, a firm that put Switzerland on the global banking map. Credit Suisse was a powerhouse in the frenzied takeover market in the 1980s and made it through the 2007-2008 financial crisis largely intact only to see a series of scandals put its fortunes in reverse.
Credit Suisse had been in rapid decline for months, and the outflow of clients and deposits reached critical levels in recent days. Last Wednesday, the Swiss central bank attempted to prop up Credit Suisse by providing it with an credit line worth US$54-billion while it sought a buyer. The emergency injection, however, ultimately failed to reverse the outflow or the share-price collapse.
UBS’s takeover of Credit Suisse has been rushed, leaving the fate of some of Credit Suisse’s businesses in doubt. UBS was reportedly happy to buy Credit Suisse’s profitable Swiss banking unit and the company’s global wealth- and asset-management businesses. But UBS had also made it clear that it had little desire to own Credit Suisse’s investment-banking division, which is dominated by CS First Boston (CSFB) in the United States.
CSFB’s future is now in doubt. Last year, Credit Suisse made plans to hive off the once-famous Wall Street business, which was a formidable mergers and acquisitions powerhouse under Bruce Wasserstein and Joe Perella in the 1980s, and sell it through an initial public offering by 2025. It is no longer certain that the spinoff can proceed. Credit Suisse’s investment-banking trading arms could be wound down or broken into pieces and sold off under UBS ownership.
UBS reportedly tried to exact a price for any agreement to buy Credit Suisse. It wanted the Swiss government to take on as much as US$6-billion in costs related to Credit Suisse’s current and future legal and regulatory woes.
It was not known Sunday morning whether any government backstop would be included in the final deal. Credit Suisse had CHF1.2-billion (US$1.3-billion) in legal provisions at the end of 2022 and said it was reasonable to assume another CHF1.2-billion would be added to the bill.
The company’s string of scandals, which propelled its fall from grace, has cost it a fortune in lawsuits and settlements.
Credit Suisse has been in decline since 2007, the year when its market value peaked at more than CHF100-billion. With First Boston, which was bought in 1988, at its side, the company was a force in banking, investment banking and trading. The international Financial Stability Board labels both Credit Suisse and UBS as two of the 30 “systemically important” global financial institutions, suggesting that the failure of any one of them could trigger a financial crisis. In other words, they are considered too big to fail.
Credit Suisse’s deterioration has been slow but steady – the bank remains solvent with many high-quality assets. A series of senior executives promised restructurings to refocus the bank, but were slow to do so as the costly, reputation-hobbling scandals piled up.
Among them was the U.S. tax fraud conspiracy, which saw the bank plead guilty in 2014 to having help American clients file false tax returns. Credit Suisse paid US$2.6-billion in fines and restitution. A year earlier, Credit Suisse was fined in Europe for its role in manipulating foreign exchange rates.
More recently, Credit Suisse’s role in the Mozambique “tuna bonds” scandal battered its image globally. Credit Suisse made US$1.3-billion of loans to Mozambique, partly to develop is tuna fishing industry. Some of the funds were unaccounted for and a Mozambique contractor was found to have arranged US$50-million in kickbacks to Credit Suisse bankers.
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
/cloudfront-us-east-1.images.arcpublishing.com/tgam/3N55D3BTSRITNI2SSZNOFXFGIU.JPG)
