Investment banking firm UBS is reportedly close to a deal to acquire its competitor Credit Suisse in a bid to save the vulnerable financial institution from full-blown collapse.
The Wall Street Journal reported on Saturday that a deal for UBS to acquire Credit Suisse could come on Sunday or sooner and regulators have offered to waive a usual shareholder voting requirement, but one sticking point is who will own Credit Suisse’s retail banking arm.
Credit Suisse, which has been in business for 167 years, announced earlier this week that it had Accepting a lifeline of over $50 billion from the Swiss National Bank in a move the company describes as “crucial action” to boost its liquidity amid a global banking crisis following the collapse of Silicon Valley Bank and concerns about Credit Suisse’s future prospects.
“Credit Suisse is taking decisive action to pre-emptively strengthen its liquidity by intending to exercise its option to borrow up to CHF 50 billion from the Swiss National Bank (SNB) under a secured credit facility and a short-term liquidity facility fully funded by high quality assets are collateralised,” Credit Suisse said in a statement.
CREDIT SUISSE FACES LAWSUITS BY US SHAREHOLDERS ABOUT ALLEGED PREVENTION OF FINANCIAL MISSING
Reuters reported on Saturday that UBS is asking Swiss government to recover about $6 billion in costs if it proceeds with the purchase.
The frenetic weekend negotiations come after a brutal week for bank stocks and efforts in Europe and the United States to shore up the sector hit by the recent implosion of the Silicon Valley Bank, which was the second largest bank failure in US history.
Swiss regulators are scrambling to present a solution to Credit Suisse ahead of markets reopening Monday, but the complexity of the two giants’ combination raises the prospect that talks will continue well into Sunday, said the person in charge of the sensitivity asked to remain anonymous situation.
CREDIT SUISSE: VULNERABLE GLOBAL INVESTMENT BANK HAS CCP-LINKED OFFICIAL RISK COMMITTEE
UBS, which has assets of over $1.1 trillion, has been pressured by Swiss authorities to complete a takeover of its local rival in a bid to get the crisis under control, two people familiar with the matter said. The plan could see a spin-off of Credit Suisse’s Swiss business.
Switzerland is preparing for emergency measures to speed up the deal, the Financial Times reported, citing two people familiar with the situation.
BEFORE THE COLLAPSE, SILICON VALLEY BANK DID NOT HAVE AN OFFICIAL CHIEF RISK OFFICER BUT HAD AN EMPLOYEE DEI EXECUTIVE
US authorities are involved in the situation and are working with their Swiss counterparts to help broker a deal, Bloomberg News reported, citing people familiar with the matter.
Credit Suisse stock shed a quarter of its value over the last week as it tries to recover from a series of scandals that have eroded investor and client confidence.
The company is one of the world’s largest wealth managers and is recognized as one of 30 global, systemically important banks whose failure would spread across the board financial system.
Credit Suisse and UBS did not immediately respond to a request for comment from Fox Business.
Reuters contributed to this report
Source : finance.yahoo.com