Business
March 18, 2023 | 7:06 p.m
UBS is reportedly finalizing a deal to take over ailing Credit Suisse. Bloomberg via Getty Images
Swiss bank UBS Group is finalizing a deal to acquire rival Credit Suisse amid a weekend of hectic negotiations, according to multiple reports.
The Swiss government and other global authorities, including some from the US, are working to seal the deal on Sunday in hopes of boosting confidence in the banking system before markets open on Monday.
The scramble to finalize the deal comes after the Swiss National Bank and the country’s top regulator, Finma, told their international peers that they see a deal with UBS as the only option to avoid the collapse of Credit Suisse prevent, reported the Financial Times.
According to Bloomberg News, it will be the first combination of two global systemically important banks since the 2008-2009 financial crisis.
A full merger would create one of the largest financial institutions in Europe.
Switzerland is preparing for emergency measures to speed up the deal, the FT said.
The country’s regulators have offered to waive rules that would normally require six-week notice and shareholder voting on a takeover in order to speed up the sale.
Credit Suisse, 167, received more than $50 billion from the Swiss National Bank this week as concerns mounted over its solvency after the banking system was rocked by the collapse of California’s Silicon Valley bank.
It will be the first combination of two global systemically important banks since the 2008-2009 financial crisis. Bloomberg via Getty Images
But that infusion didn’t stop investors from selling the bank’s shares or slowing down depositors, who were 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 organize talks over the weekend over a possible takeover by UBS, which is about twice the size of Credit Suisse at $1.1 trillion in assets, Wall Street reported Journal.
UBS is asking the Swiss government to absorb around $6 billion in costs related to a potential takeover, Portal reported. That would cover costs related to settling some of the ailing bank’s deals, as well as legal fees.
How exactly the sale will proceed is still in the stars. It’s possible that UBS could take over all of Credit Suisse, but the fate of its giant retail bank is reportedly one question – and its struggling investment bank another.
UBS, which reported $7.6 billion in profit 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.
At the end of 2022, Credit Suisse employed around 50,000 people, over 16,000 of them in Switzerland.
Its global operations include an investment banking unit in New York and an operations center near Raleigh, North Carolina.
UBS employs around 74,000 people worldwide.
A merger of the two banks could eliminate up to 10,000 jobs, but it was unclear which divisions of the banks could be affected by cuts.
Credit Suisse last year announced a plan to cut 9,000 jobs as it struggled with restructuring.
It’s still possible the deal won’t go through, and other financial players are also reportedly involved, the Journal reported.
With mail wires
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