March 18, 2023 | 19:06
UBS is reportedly closing in on a deal to take over the troubled Credit Suisse.
Bloomberg via Getty Images
Swiss bank UBS Group is closing in on a deal to take over rival Credit Suisse amid a weekend of frantic negotiations, according to multiple reports.
The Swiss government and other global authorities, including some from the United States, are working to seal the deal on Sunday, hoping to boost confidence in the banking system before markets open on Monday.
The battle to get the deal done is unfolding after the Swiss National 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 will be the first combination of two global systemically important 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.
Switzerland is preparing to use emergency measures to speed up the deal, the FT said.
The country’s regulators have offered to waive rules that normally require six weeks’ notice and shareholder votes for a takeover to make the sale happen quickly.
The 167-year-old Credit Suisse received more than $50 billion from the Swiss National Bank this week as concerns grew about its solvency following the shock to the banking system generated by the collapse of California-based Silicon Valley Bank.
But that infusion did not stop investors from selling off the bank’s shares or slow depositors who pulled their money out of accounts at a rate of $10.8 billion a day, the FT reported.
The continued panic forced the Swiss National Bank and the country’s financial regulator to organize weekend talks on the potential takeover of UBS, which with $1.1 trillion in assets is 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 takeover, Reuters reported. It would cover both expenses associated with winding up some of the distressed bank’s operations and legal bills.
Exactly how the sale will take place is still up in the air. It is possible that UBS could take over all of Credit Suisse, but reports said the fate of its huge retail bank is one question – and its troubled investment bank another.
UBS, which reported a 2022 profit of $7.6 billion, is likely to win Credit Suisse’s wealth management business, which will bring high-priced clients in Asia and the Middle East.
Credit Suisse had a loss of 7.9 billion dollars last year.
Credit Suisse had around 50,000 employees by 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 around 74,000 employees worldwide.
Up to 10,000 jobs could be eliminated if the two banks merge, but it was unclear which departments of the banks could be affected by any cuts.
Credit Suisse announced a plan to cut 9,000 jobs last year as it struggled to reorganize.
It’s still possible the deal won’t go through, and other financial players are also reportedly in the mix, the Journal reported.
With Post wires