March 18, 2023 | 19:06
UBS is said to be entering into an agreement to take over the beleaguered Credit Suisse.
Bloomberg via Getty Images
Swiss bank UBS Group is closing in on a deal to take over rival Credit Suisse over the weekend amid heated negotiations, according to multiple reports.
The Swiss government and other global authorities, including those in the United States, are working to seal the deal on Sunday to bolster confidence in the banking system before markets open on Monday.
The scramble to strike a deal comes as Switzerland’s central bank and the country’s top regulator, Finma, told their international counterparts that they see a deal with UBS as the only option to prevent Credit Suisse from collapsing, the Financial Times reported.
It is the first combination of two global systemically important banks since the 2008-2009 financial crisis, according to Bloomberg News.
A full merger would create one of Europe’s largest financial institutions.
Switzerland is preparing to use emergency measures to speed up trade, the FT said.
The country’s regulators have offered to waive rules that usually require six weeks’ notice and shareholder votes for a takeover to get the deal done quickly.
The 167-year-old Credit Suisse received more than $50 billion from the Swiss National Bank this week as concerns about its solvency grew following the shock to the banking system caused by the collapse of California-based Silicon Valley Bank.
But that infusion didn’t stop investors from selling the bank’s shares or slow down depositors withdrawing money from accounts at a rate of $10.8 billion a day, the FT reported.
The ongoing panic forced the Swiss National Bank and the country’s financial regulator to hold weekend talks on a possible takeover of UBS. UBS’s assets are 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 a potential acquisition, Reuters reported. It would cover both the expenses related to closing down the operations of some troubled banks and legal bills.
How exactly the sale will be carried out is still up in the air. It’s possible UBS could take over all of Credit Suisse, but reports say the fate of its huge retail bank is one question – and its struggling investment bank another.
UBS, which reports a 2022 profit of $7.6 billion, is likely to win Credit Suisse’s wealth management business, which comes with high-priced clients in Asia and the Middle East.
Credit Suisse posted a loss of $7.9 billion last year.
Credit Suisse employed approximately 50,000 employees at the end of 2022, of which more than 16,000 are in Switzerland.
Its global operations include an investment banking unit in New York and a center of operations near Raleigh, North Carolina.
UBS has approximately 74,000 employees worldwide.
Up to 10,000 jobs could be lost if the banks merge, but it was unclear which divisions of the banks might be affected by the cuts.
Credit Suisse announced last year that it planned to cut 9,000 jobs because of the difficulty of its reorganization.
It’s still possible that the deal won’t go through, and other financial players are said to be involved, the Journal reported.
With postal wires