UBS is said to be in takeover talks with Credit Suisse amid turmoil
The banks’ central regulators in the US, UK and Switzerland are also considering the legal structure of a deal, as UBS seeks concessions, including some form of government agreement to cover future legal costs, according to the Financial Times. Credit Suisse’s shares jumped 7 percent in after-hours trading.
What you should know about the Credit Suisse crisis and its global impact
Credit Suisse and UBS declined to comment. The Swiss National Bank and the US Federal Reserve did not immediately respond to requests for comment.
Germany’s Deutsche Bank is also looking at buying certain Credit Suisse businesses, according to a Bloomberg News report.
A takeover could limit fears that the turmoil at Credit Suisse and several troubled U.S. financial institutions would create a banking contagion similar to the events of the 2008 financial crisis. Even after actions by governments and financial institutions this week, the stock market has shown continued concern that the banking industry’s turmoil has not gone to bed. Still, experts say the financial system appears to be on solid ground and that stock market volatility may reflect news developments rather than a signal of a wider crisis.
The discussions follow a week of chaos for Credit Suisse. On Thursday, Switzerland’s central bank gave the company a $53.7 billion liquidity lifeline, after the bank revealed “material weaknesses” in its financial reporting.
But Credit Suisse’s underlying problems began well before the recent problems at US banks. The 167-year-old bank, which originally served the ultra-rich, has suffered financial losses, risk and compliance issues and a critical data breach. Credit Suisse revealed in October that it suffered significant customer withdrawals and in 2021 experienced large losses due to its exposure to the collapse of New York-based Archegos Capital Management.
The moves in Europe follow an announcement on Thursday that 11 of the largest US banks would put $30 billion into First Republic Bank. The move was aimed at strengthening the bank and sending a signal about the broader safety of the US financial system. Meanwhile, Silicon Valley Bank’s parent company filed for Chapter 11 bankruptcy on Friday.