Largest Swiss bank agrees to buy Credit Suisse, doubles its offer: Report
UBS has agreed to take over troubled Swiss rival Credit Suisse after doubling its offer to $2 billion, the Financial Times reported on Sunday amid urgent talks aimed at bailing out the beleaguered bank when markets reopen. Had to avoid bloodshed.
The two biggest banks in the wealthy Alpine nation known for its banking prominence have been in talks with the government, central bank and financial regulators throughout the weekend.
The Financial Times newspaper, which first reported on Friday the possibility of Credit Suisse being swallowed by Switzerland’s biggest bank, said UBS had agreed to buy it for $2 billion, with its Zurich-based lender taking 1 An earlier offer of billion dollars was turned down. ,
The FT said shareholders would receive 0.50 Swiss francs ($0.54) per share, with the deal being struck before markets open in Asia on Sunday.
Credit Suisse’s share price closed at 1.86 Swiss francs on Friday, after a sharp drop in the stock market last week, valuing the bank at just over $8.7 billion.
Credit Suisse’s share price has fallen from 12.78 Swiss francs in February 2021, due to a series of scandals that have been unable to shake it.
– time is money –
UBS was being urged on by authorities ahead of the stock exchange’s reopening at 0800 GMT on Monday to reassure investors and avoid a wave of contagion panic in the markets.
Blick newspaper said that Swiss authorities felt that UBS had no choice but to overcome its reluctance due to heavy pressure from Switzerland’s major economic and financial partners fearing for their own financial centres.
A merger of this scale – swallowing all or part of a bank that has sparked growing investor disquiet – would normally take months.
The FT cited unnamed sources as saying that while under Swiss rules, UBS would normally have to consult shareholders over six weeks, it could use emergency measures to skip the consultation period and the shareholder vote.
The 20-minute newspaper filmed members of the Swiss government, including President Alain Berset, walking into the finance ministry in Bern in the early hours of Sunday.
The government did not respond when contacted by AFP on Sunday.
– ‘merger of the century’ –
The head of the central bank, Thomas Jordan, president of the Swiss National Bank, was seen by AFP leaving the finance ministry.
Credit Suisse, the SNB and Swiss financial watchdog FINMA all declined to comment on the talks when contacted by AFP.
SonntagsZeitung newspaper called it “the merger of the century”.
The weekly said, “The unthinkable comes true: Credit Suisse is about to be acquired by UBS.”
It claimed that the government, FINMA and the SNB “see no other option”.
“Pressure from abroad had become too great – and the fear that Credit Suisse could trigger a global financial crisis,” it said.
David Benamou, chief investment officer at Paris-based Axiom Alternative Investments, said: “Credit Suisse management, even if forced to do so by the authorities, would only choose (the UBS acquisition) if they had no other solution. “
The Swiss bank workers’ union said there is “much at stake” for the 17,000 Credit Suisse employees “and therefore also for our economy”.
“In addition, thousands of jobs outside the banking industry would potentially be at risk,” he said, calling for the setting up of a task force to manage the situation.
– too big to fail? ,
Like UBS, Credit Suisse is one of 30 banks around the world that are considered globally systemically important banks – banks so important to the international banking system that they are considered too big to fail.
But the market moves seemed to see the bank as a weak link in the chain.
“We are now waiting for a definitive and structural solution to the problems of this bank,” French Finance Minister Bruno Le Maire told Le Parisien newspaper.
Credit Suisse’s share price plunged more than 30 percent on Wednesday to a new record low of 1.55 Swiss francs, amid fears of contagion following the collapse of two US banks. The SNB stepped in overnight with a $54 billion lifeline.
After recovering some ground on Thursday, its shares closed down eight percent at 1.86 Swiss francs on Friday as the Zurich-based lender struggled to retain investor confidence.
In 2022, the bank faces a net loss of $7.9 billion and expects a “substantial” pre-tax loss this year.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)