UBS has offered to buy Credit Suisse as a Swiss official for up to $1 billion Race to save the ailing lender.
The all-share deal could be signed as early as Sunday, the Financial Times reported, although Credit Suisse was reportedly unhappy with the heavily discounted offer.
The Swiss government reportedly plans to change the country’s laws to bypass a shareholder vote on the transaction in order to expedite it. Officials are scrambling to strike a deal before markets open Monday and fear another sharp drop in Credit Suisse stock price.
Swiss officials have approached UBS to draft a bailout deal that would keep the bank under national control.
However, UBS is wary of taking on the troubled lender without full knowledge of its business.
Credit Suisse is said to have been dissatisfied with its competitor’s takeover bid, Bloomberg reported.
UBS is offering 0.25 Swiss francs ($0.27) per Credit Suisse share, well below Friday’s closing price of 1.86 Swiss francs, all but wiping out the bank’s existing shareholders.
Credit Suisse and UBS declined to comment, and the Swiss government did not immediately respond to a request for comment.
Authorities have been scrambling to bail out the 167-year-old bank, which is among the world’s largest wealth managers.
Credit Suisse shares have lost a quarter of their value in the last week and the bank was forced to ask the Swiss National Bank to support it with up to £44 billion.
Despite central bank approval, Credit Suisse continued to suffer from ongoing withdrawals and signs of financial stress late last week as banks and customers sought to sever ties.
The front page of the Swiss newspaper NZZ am Sonntag on Sunday featured the headline “The Last Days of Credit Suisse” above an illustration of the bank’s headquarters on fire.
As one of 30 global systemically important banks, the collapse of Credit Suisse would have an impact on the entire financial system.
US authorities are working with their Swiss counterparts to help broker a deal, Bloomberg reported.
Sky News said the Bank of England has indicated it will back the proposed takeover of Credit Suisse.
UBS has asked the Swiss government for $6 billion to cover potential losses from the deal, Reuters said. The guarantees would cover the cost of winding up parts of Credit Suisse and potential litigation costs.
The bank also wants to insert a clause that would allow UBS to exit if UBS’s credit default swaps exceed a certain level, which would signal investors are nervous about their financial condition.
The hectic weekend of negotiations over the future of Credit Suisse follows a brutal week for bank stocks following the Collapse of US lenders Silicon Valley Bank and Signature Bank.
Source : finance.yahoo.com