- UBS is in talks to acquire part or all of Credit Suisse, the Financial Times reported.
- The talks come after a harrowing week for Credit Suisse, whose shares sank to a record low.
- The likely merger of Switzerland’s two largest banks comes a week after SVB collapsed.
Two of Switzerland’s largest banks and their regulators are thrashing out a merger deal that could be fast-tracked by Switzerland, the Financial Times reported.
The Swiss National Bank and Swiss regulators brokered talks between UBS and its embattled smaller rival Credit Suisse as the only way of restoring confidence in the latter lender, the newspaper reported Friday.
Later Saturday, the Times cited people familiar with the situation, reporting that the country is ready to use emergency measures to facilitate a takeover by UBS of Credit Suisse. Typically, UBS would have to allow shareholders weeks before such a deal was made, but with emergency measures, that waiting period could be skipped.
Both UBS and Credit Suisse declined to comment to the FT and Bloomberg.
Outflows from Credit Suisse hit almost $11 billion a day late this week as confidence dwindled, two unnamed sources told the FT.
The boards of both banks were meeting this weekend, suggesting that a deal is imminent. But Bloomberg reported later on Saturday that according to sources, the investment banking and trading arms of the bank are sticking points for the two sides.
UBS was asking the Swiss government to cover some legal costs or other losses if a deal was done, Bloomberg reported citing unnamed sources. They suggested that UBS could buy its rival’s wealth and asset management divisions, and sell the investment banking division.
Swiss regulators told their US and UK counterparts that a merger of UBS and Credit Suisse was their “plan A,” per the FT. UBS posted a $7.6 billion profit last year and is in far better financial health than its smaller rival, which made a loss of $7.9 billion.
Deutsche Bank is also mulling whether parts of Credit Suisse might appeal and their potential value in the event of a breakup, Bloomberg reported. A representative for the bank declined to comment to the outlet.
The FT also reported that BlackRock had explored making an offer for Credit Suisse, but a representative told Insider that it had “no interest” in acquiring part or all of the Swiss bank.
Talks about a UBS-Credit Suisse tie-up come just a week after the collapse of Silicon Valley Bank sent shockwaves throughout the banking sector as investors and deposit-holders feared other banks could be next.
Credit Suisse was hit particularly hard by investors’ concerns since it’s faced a slew of other challenges recently, including an announcement last week that it would delay its 2022 annual report after an inquiry from the SEC.
To make matters worse, this week, the Zurich-based bank’s largest shareholder, Saudi National Bank, warned it would not be able to invest more cash into the bank without facing regulatory hurdles.
On Thursday, after shares of Credit Suisse hit a record low, the troubled bank said it had secured a $50 billion lifeline from the Swiss central bank.
However, shares fell a further 8% in Zurich Friday, valuing the bank at about $8.8 billion.