UBS Group has offered to buy Credit Suisse for up to $1 billion, with the Swiss government planning to change the country’s laws to bypass a shareholder vote on the deal, the Financial Times reported on Sunday, citing sources close to the talks.
Negotiations for the takeover of Credit Suisse by UBSPhoto: Fabrice COFFRINI / AFP / Profimedia
Credit Suisse and UBS declined to comment, and the Swiss government did not immediately respond to a request for comment.
Authorities scrambled to save the 167-year-old bank, which is among the world’s biggest wealth managers, before financial markets reopened on Monday.
As one of the 30 systemically important banks worldwide, the collapse of Credit Suisse would spread throughout the financial system.
The Financial Times writes that the agreement, entirely in shares, would be signed on Sunday.
Citing people familiar with the matter, the Financial Times says an offer was made on Sunday morning at 0.25 Swiss francs ($0.27) per Credit Suisse share, well below Friday’s closing price of 1.86 Swiss francs, and almost wipes out the bank’s existing shareholders.
UBS also insisted on a “significant adverse change,” which cancels the deal if credit-default spreads increase by 1 percentage point or more, the article added.
However, the FT noted that the situation is moving quickly and there is no guarantee that the terms will remain the same or that an agreement will be reached.
A person familiar with the earlier discussions told Archyde.com that UBS had sought $6 billion in guarantees from the Swiss government as part of a possible takeover of its rival.
The collateral UBS is seeking would cover the cost of liquidating parts of Credit Suisse and potential litigation costs, two people told Archyde.com.
A source previously warned that the talks hit significant hurdles and that 10,000 jobs might be cut if the two banks combine.
The association of bank employees in Switzerland demanded on Sunday the immediate creation of a working group to deal with the risk to jobs.
Frantic weekend negotiations over the future of Credit Suisse follow a brutal week for banking stocks and efforts in Europe and the United States to prop up the sector following the collapse of US banks Silicon Valley Bank and Signature Bank.
US President Joe Biden’s administration took steps to support consumer deposits, while the Swiss central bank lent $53 billion to Credit Suisse to shore up its balance sheet.
UBS has come under pressure from Swiss authorities to take over its local rival to contain the crisis, two people familiar with the matter said.
The plan might see Credit Suisse’s Swiss division spun off, while Bloomberg reported that takeover talks called into question plans to spin off its investment bank under the First Boston brand.
US authorities are working with their Swiss counterparts to help broker a deal, Bloomberg reported, while Sky News said the Bank of England had indicated to international counterparts and UBS that it would support the proposed takeover of Credit Suisse, which considers the UK as a key market. (Source: news.ro)
