The banks’ main regulators in the US, UK and Switzerland are also considering the legal structure of a deal as UBS seeks concessions, including some form of government agreement to cover future legal costs, according to the Financial Times. Credit Suisse shares rose 7 percent in after-hours trading.
Credit Suisse and UBS declined to comment. The Swiss National Bank and the US Federal Reserve did not immediately respond to requests for comment.
Germany’s Deutsche Bank is also eyeing whether to acquire certain Credit Suisse businesses, according to a Bloomberg News report.
A takeover could limit fears that the turmoil at Credit Suisse and several troubled financial institutions in the United States would create a banking contagion similar to the events of the 2008 financial crisis. Even after actions by governments and financial institutions this week, the stock market has shown continued concern about , that the turmoil in the banking industry has not subsided. Still, experts say the financial system appears to be on solid ground and that stock market volatility may reflect news developments rather than a signal of a broader crisis.
The discussions follow a week of chaos for Credit Suisse. On Thursday, the Swiss central bank gave the company a $53.7 billion liquidity lifeline after the bank revealed “significant weaknesses” in its financial reporting.
But Credit Suisse’s underlying problems began long before the recent problems at US banks. The 167-year-old bank, which originally served the ultra-wealthy, has suffered financial losses, risk and compliance issues and a critical data breach. Credit Suisse revealed in October that it suffered significant client withdrawals and in 2021 it saw a major loss due to its exposure to the collapse of New York-based Archegos Capital Management.
The moves in Europe follow an announcement Thursday that 11 of the largest banks in the United States would pay $30 billion into First Republic Bank. The move was intended to strengthen the bank and send a signal about the broader safety of the US financial system. Meanwhile, Silicon Valley Bank’s parent company filed for Chapter 11 bankruptcy on Friday.