UBS enters into an agreement to buy a Swiss bank Credit Suisse

Business

Of Eileen AJ Connelly

March 18, 2023 | 19:06

Swiss bank UBS Group is closing in on a deal to take over rival Credit Suisse amid a weekend of frenetic negotiations, according to multiple reports.

The Swiss government and other global authorities, including some from the United States, are working to seal the deal on Sunday in hopes of bolstering confidence in the banking system before markets open on Monday.

The battle to get the deal done is beginning after the Swiss National Bank and the country̵[ads1]7;s top regulator, Finma, told their international counterparts that they consider a deal with UBS 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 in 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 speed up the deal, the FT said.

The country’s regulators have offered to waive rules that usually require six weeks’ notice and shareholder votes for takeovers to make the sale happen quickly.

The 167-year-old Credit Suisse received more than $50 billion from the Swiss National Bank this week as concerns grew about its solvency, following the shock to the banking system generated by the collapse of California-based Silicon Valley Bank.

But that infusion did not stop investors from selling the bank’s shares, or slow down depositors who were withdrawing their money from accounts at a rate of $10.8 billion a day, the FT reported.

The ongoing panic forced the Swiss National Bank and the country’s financial regulator to organize weekend talks about a potential takeover of 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. It will cover both expenses associated with liquidating some of the ailing bank’s operations and legal bills.

Exactly how the sale will be carried out is still up in the air. It’s possible UBS could take over all of Credit Suisse, but reports said the fate of the huge retail bank is one question – and the 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 bring high-priced clients in Asia and the Middle East.

Credit Suisse had a loss of $7.9 billion last year.

Credit Suisse had around 50,000 employees by 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 could be eliminated if the two banks merge, but it was unclear which divisions of the banks could be affected by any cuts.

Credit Suisse announced a plan to cut 9,000 jobs last year as it struggled to restructure.

It’s still possible the deal won’t go through, and other financial players are also reportedly in the mix, the Journal reported.

With Post wires