Reports say that Switzerland may take emergency measures to speed up the deal with UBS and Credit Suisse.
- According to the Financial Times, UBS is negotiating a partial or full acquisition of Credit Suisse.
- The talks come after an agonizing week for Credit Suisse, whose shares have fallen to record lows.
- The likely merger of the two largest banks in Switzerland will take place a week after the collapse of the SVB.
Switzerland’s two largest banks and their regulators are working on a merger deal that could be expedited by Switzerland, according to the Financial Times.
On Friday, the newspaper reported that the Swiss National Bank and Swiss regulators brokered talks between UBS and its smaller competitor Credit Suisse, which was in dire straits as it was the only way to restore confidence in the latter lender.
Later on Saturday, the Times, citing people familiar with the situation, reported that the country was ready to use emergency measures to facilitate a takeover of UBS Credit Suisse. Normally, UBS would have to allow shareholders a few weeks in advance of such a deal, but with the help of emergency measures, this waiting period could be skipped.
Both UBS and Credit Suisse declined to comment for the FT and Bloomberg.
The outflow of funds from Credit Suisse reached nearly $11 billion a day at the end of this week as confidence dwindled, two unnamed sources told the FT.
The boards of both banks met this weekend, suggesting a deal was imminent. But Bloomberg reported later on Saturday that the bank’s investment banking and trading divisions are a sticking point for both sides, according to sources.
According to Bloomberg, citing unnamed sources, UBS has asked the Swiss government to cover some legal costs or other damages if the deal goes through. They suggested that UBS could buy its rival’s wealth and asset management divisions and sell off its investment banking division.
According to the FT, Swiss regulators told their US and UK counterparts that the UBS-Credit Suisse merger was their “Plan A”. UBS posted a $7.6 billion profit last year and is in much better financial shape than its smaller competitor, which posted a $7.9 billion loss.
Deutsche Bank is also mulling whether parts of Credit Suisse could appeal and their potential value if they break up, Bloomberg reported. A bank spokesman declined to comment.
The FT also said BlackRock was considering making an offer to Credit Suisse, but a spokesperson told Insider it had “no interest” in acquiring part or all of the Swiss bank.
Talk of a UBS-Credit Suisse merger came just a week after the collapse of Silicon Valley Bank sent shockwaves across the banking sector as investors and depositors feared other banks might be next.
Credit Suisse has been hit particularly hard by investor anxiety as it has faced a host of other issues lately, including an announcement last week that it will delay its 2022 annual report following an SEC request.
To make matters worse, the Zurich-based bank’s largest shareholder, the National Bank of Saudi Arabia, warned this week that it would not be able to invest more money in the bank without facing regulatory hurdles.
On Thursday, after Credit Suisse shares plunged to a record low, the troubled bank said it received a $50 billion lifeline from the Swiss central bank.
However, shares fell another 8% on Friday in Zurich, leaving the bank valued at about $8.8 billion.
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