UBS is in talks to acquire part or all of Credit Suisse, the Financial Times reported. The talks come after a trying week for Credit Suisse, whose shares fell to a record low. The likely merger of the two largest Swiss banks comes a week after the bankruptcy of SVB. Something is loading.
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Two of Switzerland’s biggest banks and their regulators are working out a merger deal that could be accelerated by Switzerland, the Financial Times has reported.
The Swiss National Bank and Swiss regulators have brokered talks between UBS and embattled smaller rival Credit Suisse as the only way to restore confidence in the latter lender, the newspaper reported on Friday.
Later Saturday, The Times quoted people familiar with the situation as reporting that the country is ready to use emergency measures to facilitate a UBS takeover of Credit Suisse. Typically, UBS would have to clear shareholders weeks before such a deal is made, but with emergency measures, that waiting period could be skipped.
UBS and Credit Suisse declined to comment on the FT and .
Outflows from Credit Suisse hit nearly $11 billion a day at the weekend as confidence waned, two unnamed sources told the FT.
The boards of the two banks were meeting over the weekend, suggesting a deal is imminent. But reported later Saturday that sources said the bank’s investment banks and commercial arms are sticking points for both sides.
UBS was asking the Swiss government to cover certain legal costs or other losses if a settlement was reached, reported citing unnamed sources. They suggested UBS could buy its rival’s wealth and asset management divisions and sell the investment banking division.
Swiss regulators have told their US and UK counterparts that a merger of UBS and Credit Suisse is their “plan A”, according to the FT. UBS posted a profit of $7.6 billion last year and is in much better financial health than its smaller rival, which posted a loss of $7.9 billion.
Deutsche Bank is also questioning whether parts of Credit Suisse could appeal and their potential value in the event of a breakup, reported. A bank representative declined to comment on the outlet.
The FT also reported that BlackRock had considered making an offer for Credit Suisse, but a representative told Insider 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 sent shockwaves through the banking industry, with investors and deposit holders fearing other banks could be next.
Credit Suisse has been particularly hit by investor concerns as it has recently faced a host of other challenges, including the announcement last week that it would delay its 2022 annual report after an SEC investigation.
To make matters worse, this week the Zurich-based bank’s largest shareholder, Saudi National Bank, warned that it would not be able to invest more cash in the bank without facing regulatory hurdles.
On Thursday, after shares of Credit Suisse hit a record high, the troubled bank said it had secured a $50 billion lifeline from the Swiss central bank.
However, shares fell another 8% in Zurich on Friday, valuing the bank at around $8.8 billion.