The most impactful story this week did not come from the Financial Times or any of our main rivals. It was written by Lukas Hässig, a 57-year-old journalist from Zurich who started the Inside Paradeplatz blog.
On Wednesday morning, Credit Suisse issued its third profit warning in six months, sending its shares down more than 7% to a record high.
Then Hässig published his story. He wrote that Boston-based State Street was planning a 23 billion Swiss franc ($23 billion) takeover bid for the Swiss bank.
There was a huge swing. Shares of Credit Suisse rose 12% and ended the day as the best performing major bank in the world.
“It’s crazy,” Hässig told me. “And also for me, it was an emotional thing.”
All financial journalists love scoops that move the markets. It’s extremely satisfying to see prices jump or dive based on a news article you’ve written.
But this story was not simple. How you perceive it a few days later depends on how you rank the gullibility of everyone involved.
Among the most gullible were the investors who rushed to buy Credit Suisse. In addition to significant size and culture issues, there would be monumental regulatory hurdles to a deal. Would Switzerland really allow one of its two global banking institutions to be taken over by a foreigner? And would the US Federal Reserve allow its stagnant bank to take over the assets and liabilities of the racy, accident-prone Zurich lender?
As reporters, investors and bankers tried to confirm the story, State Street issued a statement Wednesday afternoon: “We are not going to respond to an earlier report. As we discussed previously, we are focused on our ongoing acquisition of Brown Brothers Harriman’s Investors Services business.
It didn’t have the desired effect. State Street shares fell more than 5% as the market apparently worried about the lack of a categorical denial.
On Thursday morning, Credit Suisse Chief Executive Thomas Gottstein was asked about the blog post at an industry conference. “We never comment on rumours,” he replied. “My father once gave me advice: for really stupid questions, it’s better not to say anything at all.”
Gottstein’s remarks were at least as ambiguous as State Street’s statement, but he did a better job of dispelling the takeover talk: Credit Suisse shares fell 6%.
Later on Thursday, State Street felt compelled to issue a more emphatic statement, saying it was “not pursuing an acquisition or any other business combination with Credit Suisse.” There is no basis for the persistent market rumors. Although it has been a longstanding policy of us not to comment on such speculation, we believe that a response to these reports is now warranted in this instance.
There are lessons to be learned from this. First, it can be hard to avoid takeover talk, but it’s often better to drop the subtlety. Second, markets may be more restrained than a year ago, but they are still susceptible to wild swings on unlikely news.
For his part, Hässig notes that the story has been covered. He was frank that it was based on a single source. The headline ended with a question mark: “Will State Street Buy Credit Suisse?” He says: ‘I said it as a speculative story’, but admits that ‘there was a price to pay and there was an urgency to it – that a deal could somehow be immediate’ .
Has Hässig been manipulated? “That’s the crucial question, I agree,” he said. ” What can I say ? I can only say that you never know. I try not to be naive but if I had such a thought, such a suspicion, I would not have published it, at least not in this way.
“I’m a journalist, not a trader,” he says. “I have known this source for a few years. I got several pieces of information from this source that were accurate, so I believed it. I had no reason to think twice if he could play a game.