Credit Suisse’s UBS takeover could be imminent: report

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UBS

Group could complete a takeover

CreditSuisse

Group on Saturday night, the Financial Times said, as regulators rush to merge Switzerland’s two largest banks amid industry turmoil.

Both

Swiss National Bank

and regulator Finma now see buying UBS (ticker: UBS) as the only option to tame mounting problems at Credit Suisse (CS), the FT reported on Saturday, citing anonymous sources close to the negotiations.

Credit Suisse declined to comment on the report, while UBS did not respond Barrons Request for comments.

BlackRock

(BLK) was before quoted as another possible suitor, although it has since been public denied that it is involved in an acquisition.

The urgency for a deal comes as investors continue to pull money from Credit Suisse, which has been draining nearly $11 billion a day for the past week. The bank also saw net outflows of more than $450 million from its funds under management in the U.S. and Europe from March 13-15, Morningstar Direct said on Friday, as private and institutional counterparties managed money from funds managed by the troubled Swiss lender fund withdrawn.

The possible end of Credit Suisse as a separate entity 167 years after its inception is not entirely surprising: the bank has grappled with a range of issues in recent years, from concerns over its financial controls to government investigations, courtroom setbacks, and several quarters of staggering losses, among other issues that have investors wondering if they’ll survive.

But the timeline for a solution has gained momentum in recent weeks following the collapse of top-tier banks in the US, most notably Silicon Valley Bank, which also has assets in the US market for a buyer.

The closure of SVB sparked global concerns about the health of the industry, causing many customers to seek to withdraw their funds and putting weaker banks’ shares under particular pressure amid large market swings. Credit Suisse shares are down more than 17% in the past five trading days and have lost over a third of their value in 2023 so far.

UBS was also hit by the sell-off in financials, which fell more than 7% last week despite falling just 4% this year.

According to FT sources, talks are now focused on concessions that UBS would seek should it secure a deal. The bank wants to be able to phase in all global capital rules over time and protect itself from ongoing legal costs, which Credit Suisse has previously warned could cost it about $2 billion.

Write to Teresa Rivas at teresa.rivas@barrons.com