UBS agrees to buy Credit Suisse for $2 billion: report

UBS has agreed to acquire beleaguered Swiss rival Credit Suisse after doubling its offer to $2 billion. financial Times Reportedly on March 19, 2023 during urgent talks aimed at saving the beleaguered bank from bloodshed when markets reopen.

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.

financial Times The newspaper, which was the first to report on the possibility of Credit Suisse being swallowed by Switzerland’s largest bank, on 17 March said that UBS had agreed to buy it for $2 billion, with its partner Zurich The lender had rejected an earlier offer of $1 billion.

feet Said shareholders will receive 0.50 Swiss francs ($0.54) per share, with the deal being struck before the market open in Asia on March 19.

Credit Suisse’s share price closed at 1.86 Swiss francs on March 17, after a steep fall 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.

UBS was being urged by authorities ahead of the stock exchange’s reopening on March 20 at 8am GMT (1.30pm IST) to reassure investors and avoid a wave of contagion panic in the markets.

Swiss authorities felt that UBS had no choice but to overcome its reluctance in the face of heavy pressure from Switzerland’s major economic and financial partners fearing for their own financial centres. blick Newspaper.

A merger of this scale – which involves swallowing all or part of a bank that has sparked growing investor disquiet – would normally take months.

While under Swiss regulations, UBS must normally consult with shareholders in six weeks, it can use emergency measures to skip the consultation period and shareholder vote, feet said citing unnamed sources.

20 minutes The 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 19 March.

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 The newspaper called it the “merger of the century”.

The weekly said, “The unthinkable comes true: Credit Suisse is being 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.

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,” said French Finance Minister Bruno Le Maire. le parisian Newspaper.

Credit Suisse’s share price plunged more than 30% 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 some correction on 16 March, its shares fell eight percent to close at 1.86 Swiss francs on 17 March as the Zurich-based lender struggled to maintain investor confidence.

In 2022, the bank faces a net loss of $7.9 billion and expects a “substantial” pre-tax loss this year.


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