Credit Suisse, UBS and their key regulators are working out an agreement to merge Switzerland’s two largest banks The Financial Times reports Saturday.
The Swiss National Bank and the regulator Finma have told international colleagues that they see a deal with UBS as the only option to stop the loss of confidence in Credit Suisse CSGN.
The bank’s deposit outflows topped CHF10 billion ($10.8 billion) a day late last week as fears over its health mounted, according to the report.
The board members of the two banks are meeting this weekend. Credit Suisse’s key regulators in the US, UK and Switzerland are considering the legal structure of a deal and several concessions that UBS UBSG,
UBS wants all of the demands it would face under global capital rules for the world’s largest banks to be phased in. In addition, UBS has sought some form of compensation or government settlement to cover future legal costs, one of the people said.
UBS, Credit Suisse, the SNB and the Federal Reserve all declined to comment. Finma and the Bank of England did not immediately respond to requests for comment.
The possibility of a deal comes days after Switzerland’s central bank was forced to provide Credit Suisse with a 50 billion franc ($54 billion) emergency credit line.
See: Credit Suisse shares rise as the Swiss banking giant says it will borrow money and buy back debt from the SNB
That failed to stem a fall in its share price, which fell to record lows after its largest investor ruled out providing more capital and its chairman admitting that the churn of wealth management clients had continued.
The prospective takeover reflects the strong divergence in the fortunes of the two banks.
Over the past three years, UBS shares have gained around 120 percent while those of its smaller competitor have plummeted around 70 percent. UBS has a market cap of $56.6 billion, while Credit Suisse closed Friday’s trading at $8 billion. In 2022, UBS made a profit of $7.6 billion while Credit Suisse posted a loss of $7.9 billion, erasing gains for the entire previous decade.
Earlier Bloomberg News reports that Deutsche Bank AG DBK,
monitored the situation at Credit Suisse for a potential acquisition opportunity of certain companies.
US investment giant BlackRock BLK,
had developed a competing concept, evaluated several options and spoken to other potential investors who This was also reported by the Financial Times. However, BlackRock denied that it was working on a possible competing offer for Credit Suisse Group AG, according to Bloomberg NewS
A full merger of UBS and Credit Suisse would create one of the largest global systemically important financial institutions in Europe. UBS has total assets of $1.1 trillion and Credit Suisse $575 billion.
Source : www.marketwatch.com