UBS Discussing Potential Acquisition of Credit Suisse
According to the Financial Times, the Swiss bank USB is negotiating a full or partial takeover of Credit Suisse.
Credit Suisse, Switzerland’s second-biggest bank, has come under pressure this week after the collapse of two U.S. lenders sparked a crisis in the sector. By the close of financial markets on Friday, the bank’s shares were down 8 percent.
The Swiss central bank and the Financial Market Supervisory Authority have told their US and UK counterparts that their “first” plan to end the crisis of confidence facing Credit Suisse is to merge it with USB, unnamed sources cited the Financial Times.
The source said the Swiss central bank “wants lenders to agree on a simple and straightforward solution before financial markets open on Monday,” while acknowledging that “there are no guarantees” that an agreement will be reached.
Another source told the paper that USB wants to assess the risks that a full or partial takeover by a competitor could pose to its business.
The Swiss central bank and Credit Suisse declined to respond to AFP’s request for comment, while USB and the watchdog did not respond immediately.
Credit Suisse, which has been struggling for two years, was considered the weak link in the banking sector due to a series of scandals and a massive restructuring program launched in October last year.
Its market value has been hit hard this week amid fears of contagion from the collapse of two US banks, Silicon Valley Bank and Signature Bank. This is in addition to the publication of its annual report, which points out “fundamental weaknesses” in its internal controls.
However, its shares fell sharply on Wednesday after the National Bank of Saudi Arabia, its main shareholder, refused to provide additional financial assistance to the troubled bank due to regulatory scrutiny.
By Wednesday evening, the SNB had pledged to provide Credit Suisse with a $53.9 billion loan despite pressure.
Analysts at JP Morgan floated USP’s idea of acquiring Credit Suisse as the “most likely” scenario.
The idea of a merger of the largest Swiss banks is often raised, but is generally rejected due to competition and the risks it poses to the stability of the Swiss financial system, given the size of the bank that the merger will result in.
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