UBS and Swiss regulators are reportedly racing for a deal for Credit Suisse
UBS is in talks to acquire some or all of Credit Suisse, the Financial Times reported.
The talks come after a harrowing week for Credit Suisse, whose shares have fallen to record lows.
The likely merger of Switzerland’s two largest banks comes a week after the collapse of the SVB.
Two of Switzerland’s largest banks and their regulators are forging a merger deal that could be announced later on Saturday, the Financial Times reported.
The Swiss National Bank and Swiss regulators brokered talks between UBS and its embattled smaller competitor Credit Suisse as the only way to restore confidence in the latter lender, the newspaper reported on Friday.
Outflows from Credit Suisse hit nearly $11 billion a day late this week as confidence dwindled, two unnamed sources told the FT.
The boards of both banks met this weekend and indicated a deal is imminent. But Bloomberg later reported on Saturday that sources said the bank’s investment banking and trading arms are sticking points for both sides.
UBS has asked the Swiss government to cover some legal costs or other losses if a deal goes through, Bloomberg reported, citing unnamed sources. They suggested that UBS could buy its competitor’s wealth and asset management division and sell its investment banking division.
Both UBS and Credit Suisse declined to comment to the FT and Bloomberg.
The Swiss regulator told its US and UK counterparts that a merger of UBS and Credit Suisse was its “Plan A,” according to FT. UBS made a profit of $7.6 billion last year and is in far better financial shape than its smaller competitor, which posted a loss of $7.9 billion.
Deutsche Bank is also considering whether parts of Credit Suisse might be attractive and what potential value they might have in the event of a dissolution, Bloomberg reported. A representative for the bank declined to comment to the outlet.
The FT also reported that BlackRock was considering a bid for Credit Suisse, but a representative told Insiders it had “no interest” in acquiring part or all of the Swiss bank.
Talks of a UBS-Credit Suisse merger come just a week after the collapse of Silicon Valley Bank and have sent shockwaves across the banking sector as investors and deposit holders fear other banks could be next.
Credit Suisse has been particularly hard hit by investor concerns as it has faced a number of other challenges of late, including an announcement last week that it would be deferring its 2022 annual report following a request from the SEC.
To make matters worse, the Zurich-based bank’s largest shareholder, Saudi National Bank, warned this week that it would not be able to put more money into the bank without encountering regulatory hurdles.
On Thursday, after Credit Suisse shares hit a record low, the ailing bank announced it had secured a $50 billion lifeline from Switzerland’s central bank.
On Friday, however, shares in Zurich fell another 8%, valuing the bank at about $8.8 billion.
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