March 18, 2023 | 7:06 p.m
UBS is reportedly finalizing a deal to take over troubled Credit Suisse.
Bloomberg via Getty Images
Swiss bank UBS Group is closing in on a deal to take over rival Credit Suisse amid heated negotiations over the weekend, according to multiple reports.
The Swiss government and other global officials, including some from the United States, are trying to close the deal on Sunday in hopes of boosting confidence in the banking system before markets open on Monday.
The fight to get the deal done comes after the Swiss National Bank and FINMA, the country’s top regulator, told their international firms that the only way to prevent Credit Suisse from collapsing was a deal with UBS. Financial Times reported.
It would be the first merger of two global systemically important banks since the 2008-2009 financial crisis. According to Bloomberg News.
A complete merger would create one of Europe’s largest financial institutions.
Switzerland is preparing to use emergency measures to fast-track the deal, the FT reported.
The country’s regulators have offered to waive rules that normally require six weeks’ notice and shareholder votes on takeovers to speed up sales.
Credit Suisse, 167, received more than $50 billion from Swiss National Bank this week, following a shock to the banking system from the collapse of the California-based Silicon Valley bank.
But that infusion hasn’t stopped investors from selling the bank’s shares or slowed depositors, who are pulling their money out of 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 hold weekend talks on a possible takeover by UBS, which is twice the size of Credit Suisse, with $1.1 trillion in assets. The Wall Street Journal reported.
UBS is asking the Swiss government to cover about $6 billion in costs related to the potential acquisition, Reuters reported. This will cover both costs related to freezing the operations of the ailing bank and some of the legal bills.
What sales will look like is still up in the air. UBS is likely to take over all of Credit Suisse, but reports say the fate of its biggest retail bank is one question – and its troubled investment bank another.
UBS, which is expected to generate $7.6 billion in profits by 2022, is likely to win Credit Suisse’s wealth management business, which comes with high-net-worth clients in Asia and the Middle East.
Credit Suisse posted a loss of $7.9 billion last year.
Credit Suisse will have around 50,000 employees at the end of 2022, including more than 16,000 in Switzerland.
Its global operations include an investment banking division in New York and an operations center near Raleigh, North Carolina.
UBS has approximately 74,000 employees worldwide.
A merger of the two banks could cut up to 10,000 jobs, but it is unclear which divisions of the banks would be affected by which cuts.
Credit Suisse announced plans to cut 9,000 jobs last year as it struggled to restructure.
The deal may not go through, and other financial institutions are in the mix, the Journal reported.
With post wires