UBS Group AG offers to buy Credit Suisse for up to $1 billion: Report

Credit Suisse And UBS declined to comment and the Swiss government did not immediately respond to a request for comment.

Authorities attempted to rescue the 167-year-old bank, one of the world’s largest wealth managers, before financial markets reopened on Monday. As one of the 30 globally systemically important banks, the failure of Credit Suisse would spread throughout the entire financial system.

The Financial Times reports that the all-share deal will be signed as soon as Sunday.

Citing people familiar with the matter, it said an offer was made Sunday morning at 0.25 Swiss francs ($0.27) per share of Credit Suisse, lower well above Friday’s closing price of 1.86 Swiss francs and virtually eliminating the bank’s existing shareholders.

The report added that UBS had also highlighted a “significant adverse change” that would invalidate the deal in the event its credit default spreads soar by 100 basis points or more. However, it noted that the situation is evolving rapidly and there is no guarantee that the terms will stay the same or that an agreement will be reached.

A person familiar with the earlier talks told Reuters that UBS was seeking $6 billion from the Swiss government as part of a possible acquisition of its rival.

Two people told Reuters that the guarantees UBS was seeking would cover the cost of dissolving Credit Suisse’s divisions and potential litigation fees.

A source previously warned that negotiations are facing significant setbacks and 10,000 jobs could be cut if the two banks come together. The Swiss Bankers Association on Sunday called for the immediate creation of a task force to deal with risks to jobs.

The frenetic talks over the weekend for Credit Suisse’s future come after a brutal week for bank stocks and efforts in Europe and the US to shore up the sector following the collapse of banks. US lenders are Silicon Valley Bank and Signature Bank.

The administration of US President Joe Biden has moved to support consumer deposits while the Swiss central bank lends billions of dollars to Credit Suisse to stabilize its wobbly balance sheet.

UBS has been under pressure from Swiss authorities to take over its local rival to control the crisis, two people with knowledge of the matter said.

The plan could disrupt Credit Suisse’s Swiss business, while Bloomberg reports that takeover talks are casting doubt on plans to phase out the investment banking under the brand name. First Boston.

US authorities are working with their Swiss counterparts to help broker a deal, Bloomberg reported, while Sky News said the Bank of England had indicated to its international partners and UBS said it would support the proposed takeover of Credit Suisse, which sees the UK as a key focus. market.

STRONG RESPONSE

Credit Suisse shares have lost a quarter of their value in the last week. The bank has been forced to tap $54 billion in central bank funding as it tries to recover from a series of scandals that have eroded investor and customer confidence.

“The Last Days of Credit Suisse,” the front page of the Swiss newspaper NZZ am Sonntag featured an illustration of the bank’s headquarters in flames.

The failure of the California-based Silicon Valley Bank has highlighted the relentless campaign of rate hikes by the US Federal Reserve and other central banks – including the European Central Bank. on Thursday – has put pressure on the banking industry.

The collapse of SVB and Signature was the largest bank failure in US history behind the collapse of Washington Mutual during the 2008 global financial crisis. US Senator Elizabeth Warren, who is pushing pushing for tighter regulations on banking, has called for investigations into two incidents, the Wall Street Journal reported.

Bank stocks globally were battered with the S&P Banks index falling 22%, marking its biggest two-week drop since the pandemic rocked markets in March 2020.

US banks have sought a record $153 billion in emergency liquidity from the Federal Reserve in recent days, and major lenders have thrown a $30 billion relief to small lenders. than First Republic.

First Citizens BancShares is evaluating an offer to buy SVB along with at least one other pursuer, while the Alliance of Midsize Banks of America asks regulators to extend federal insurance to all funds. sent over the next two years, Bloomberg reported.

In Washington, focus has shifted to closer oversight to ensure that banks and their executives are held accountable to Biden’s call for Congress to give regulators greater power over with this field.

Rapid and dramatic events could mean big banks get bigger, smaller banks can strain to keep up, and many regional lenders could close.

“People are actually moving their money around, all of these banks basically,” said Keith Noreika, vice president of Patomak Global Partners and former US Republican currency controller. will look different in the next three, six months.”