Swiss bank UBS Group is closing in on a deal to take over its rival Credit Suisse amid a weekend of frenzied negotiations, according to multiple reports.
The Swiss government and other global authorities, including some from the US, are working toward sealing the agreement on Sunday in the hopes of shoring up trust in the banking system before the markets open Monday.
The scramble to get the deal done is playing out after the Swiss National Bank and the country’s top regulator, Finma, told their international counterparts they regard a deal with UBS as the only option to stop 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 fast-track the deal, the FT said.
The country’s regulators have offered to waive rules that ordinarily require six weeks’ notification and shareholder votes on a takeover, in order to make the sale happen quickly.
The 167-year-old Credit Suisse got more than $50 billion from the Swiss National Bank this week as worries mounted about its solvency, following the shock to the banking system generated by the collapse of the California-based Silicon Valley Bank.
But that infusion didn’t stop investors from selling off the bank’s stock, or slow down depositors who were pulling their money out of accounts at a rate of $10.8 billion per day, the FT reported.
The ongoing panic forced the Swiss National Bank and the country’s financial regulator to organize the weekend’s talks on the potential takeover by 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. That would cover both expenses associated with winding down some of the ailing bank’s operations and legal bills.
Exactly how the sale will be worked out is still up in the air. It’s possible 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 is another.
UBS, which reported a 2022 profit of $7.6 billion, is likely to win Credit Suisse’s wealth management business, which will come with high-priced clients in Asia and the Middle East.
Credit Suisse posted a loss of $7.9 billion last year.
Credit Suisse had around 50,000 employees at 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 hub near Raleigh, North Carolina.
UBS has around 74,000 employees worldwide.
Up to 10,000 jobs may be eliminated if the two banks combine, but it was unclear which divisions of the banks might be hit 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 may not go through, and other financial players are also reportedly in the mix, the Journal reported.
With Post wires