UBS in talks to buy Credit Suisse

UBS is in discussions to take over all or part of Credit Suisse, with the boards of Switzerland’s two biggest lenders due to meet separately over the weekend to consider Europe’s most consequential banking combination since the financial crisis, according to several people briefed on the talks.

The Swiss National Bank and regulator Finma are orchestrating the talks in an effort to bolster confidence in the country’s banking sector, the people said. Their intervention comes days after the central bank was forced to provide an emergency credit line of SFr50 billion ($54 billion) to Credit Suisse.

However, this failed to halt a slide in the share price, which has fallen to record lows after the biggest investor ruled out providing more capital and the chairman admitted that an exodus of wealth management clients had continued.

UBS has a market capitalization of $56.6 billion, while Credit Suisse shares closed Friday at $8 billion.

Swiss regulators told their US and UK counterparts on Friday night that merging the two banks was their “plan A”[ads1]; to arrest a collapse in confidence in Credit Suisse, a person familiar with those discussions told the FT.

A number of different options are under discussion between the two banks, another person told the FT, adding that both sides are trying to evaluate regulatory constraints in different jurisdictions. This person added that UBS is also analyzing the potential risks a deal could have on its own business.

The focus from the central bank is to agree on a simple and straightforward solution before the markets open on Monday, said one of the people. There is no guarantee that an agreement will be reached.

Credit Suisse declined to comment. UBS declined to comment, as did the Bank of England and the Federal Reserve. The Swiss National Bank did not respond to requests for comment.

This is a developing story. More to follow. . .