UBS is closing in on a deal to buy fellow Swiss bank Credit Suisse

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March 18, 2023 | 7:06 p.m

Swiss bank UBS Group is close to closing a deal to acquire rival Credit Suisse amid frantic negotiations over the weekend, according to multiple reports.

The Swiss government and other global authorities, including some US authorities, are working on the agreement on Sunday in hopes of boosting confidence in the banking system before markets open on Monday.

The scramble to get the deal started after the Swiss National Bank and the country’s largest regulator, Fenma, told their international counterparts that they considered a deal with UBS the only option to prevent a collapse of Credit Suisse, The Financial Times reported.

It will be the first combination of two systemically important global banks since the financial crisis of 2008-2009, According to Bloomberg News.

A full merger would create one of the largest financial institutions in Europe.

The Financial Times said Switzerland was preparing to use emergency measures to speed up the deal.

The country’s regulators have offered to waive rules that normally require six weeks’ notice and a shareholder vote on acquisition, in order to quickly achieve the sale.

Credit Suisse, 167, took more than $50 billion from the Swiss National Bank this week as concerns about its solvency grew, following the shock to the banking system resulting from the collapse of California-based Silicon Valley Bank.

It will be the first combination of two systemically important global banks since the financial crisis of 2008-2009.
Bloomberg via Getty Images

But the leak didn’t stop investors from selling the bank’s shares, or slow down depositors who were withdrawing money from accounts at a rate of $10.8 billion a day, the Financial Times reported.

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The ongoing panic has forced the Swiss National Bank and the country’s financial regulator to stage talks over the weekend about a possible takeover by UBS, which has $1.1 trillion in assets about twice the size of Credit Suisse, The Wall Street Journal reported.

UBS is asking the Swiss government to cover about $6 billion in costs related to the potential acquisition, Reuters reported. This will cover both expenses associated with winding up some of the troubled bank’s operations and legal bills.

Exactly how the sale will take place is still pending. UBS will probably take over all of Credit Suisse, but reports say the fate of the retail giant has one question — and its ailing investment bank another.

UBS, which posted a profit of $7.6 billion in 2022, is likely to win Credit Suisse’s wealth management business, which will come with high-priced clients in Asia and the Middle East.

Credit Suisse posted a loss of $7.9 billion last year.

Credit Suisse had around 50,000 employees at the end of 2022, including more than 16,000 in Switzerland.

Its global operations include an investment banking unit in New York and an operations center near Raleigh, North Carolina.

UBS has approximately 74,000 employees worldwide.

Up to 10,000 jobs could be cut if the two banks meet, but it was not clear which section of the banks would be hurt by any cuts.

Credit Suisse announced a plan to cut 9,000 jobs last year as it struggled to reorganize.

It is still possible that the deal may not go through, the newspaper reported, as other financial players are also reportedly in the mix.

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with wire




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