ZURICH: UBS extension he was against the clock on Sunday in talks to finalize a giant takeover of his troubled Swiss bank Credit Suisse and reassure investors before markets reopen.
Switzerland’s largest bank, UBS, was urged by authorities to go over the edge in a deal in a bid to avert a contagious wave of panic in the markets on Monday.
The wealthy Alpine nation is the largest banks were in urgent talks this weekend with the country’s banking and regulatory authorities, several media reported.
The generally well-informed tabloid Blick said UBS would buy Credit Suisse in a deal to be sealed on Sunday at a one-off meeting in Bern bringing together Swiss government and bank executives.
A merger of this magnitude, involving the full or partial winding up of a bank, causing increasing discomfort for investors, would normally take months. UBS will have had a few days.
However, Swiss authorities felt they had no choice but to push UBS to overcome its reluctance, due to enormous pressure from Switzerland’s major economic and financial partners fearing for their own financial centers, Blick said.
“Everything points to a Swiss solution this Sunday. And when the stock market opens on Monday, Credit Suisse could be a thing of the past,” the paper said.
Credit Suisse, the country’s SNB central bank and Switzerland’s financial watchdog FINMA all declined to comment when approached by the AFP about the possibility of a takeover of UBS.
The Swiss government held an urgent meeting to discuss the situation last Saturday in the capital Bern. The government spokesman declined to comment on the talks, reported the Swiss news agency ATS.
An acquisition of this size is dauntingly complex.
UBS would require government guarantees to cover legal fees and potential losses, according to a Bloomberg report, citing unnamed sources.
The SonntagsZeitung newspaper called it “the fusion of the century”.
“The unthinkable becomes reality: Credit Suisse is about to be taken over by UBS,” said the weekly.
The government, FINMA and the SNB “see no other option,” he said.
“The pressure from abroad had become too strong and fears that the Credit Suisse falter could trigger a global financial crisis,” he said.
Like UBS, Credit Suisse is one of 30 banks worldwide recognized as Global Systemically Important Banks, of such importance to the international banking system that they are considered too big to fail.
But the market movement seemed to suggest that the bank was perceived as a weak link in the chain.
“We are now awaiting a definitive and structural solution to the problems of this bank,” French Finance Minister Bruno Le Maire told Le Parisien newspaper. “We remain extremely vigilant.”
According to the Financial Times newspaper, Credit Suisse clients withdrew 10 billion Swiss francs ($10.8 billion) in deposits in a single day late last week, a measure of how much trust in the bank has declined.
After a turbulent week in the stock market, which forced the SNB to step in with a $54 billion lifeline, Credit Suisse was worth just over $8.7 billion on Friday night – precious little for a bank considered a of 30 key institutions worldwide.
FINMA and the SNB have said that Credit Suisse “meets the capital and liquidity requirements” imposed on such banks, but mistrust remains.
Amid fears of contagion after the collapse of two banks in the United States, Credit Suisse’s share price tumbled more than 30% on Wednesday, hitting a new all-time low of 1.55 Swiss francs.
After recovering some ground on Thursday, Credit Suisse shares finished 8% down on Friday at 1.86 Swiss francs apiece as the Zurich-based lender struggled to maintain investor confidence.
Credit Suisse has been plagued by a series of scandals in recent years. The shares were worth 12.78 Swiss francs in February 2021.
In 2022, the bank suffered a net loss of $7.9 billion and expects a “substantial” pre-tax loss this year.
“This is a bank that never seems to put its house in order,” IG analyst Chris Beauchamp commented in a market note this week.
The idea of major Swiss banks joining forces has emerged over the years, but has generally been rejected due to competition concerns and risks to the stability of the Swiss financial system.
“Credit Suisse’s management, even if forced to do so by the authorities, would choose (this option) only if it had no other solution,” said David Benamou, chief investment officer at Paris-based Axiom Alternative Investments.
Switzerland’s largest bank, UBS, was urged by authorities to go over the edge in a deal in a bid to avert a contagious wave of panic in the markets on Monday.
The wealthy Alpine nation is the largest banks were in urgent talks this weekend with the country’s banking and regulatory authorities, several media reported.
The generally well-informed tabloid Blick said UBS would buy Credit Suisse in a deal to be sealed on Sunday at a one-off meeting in Bern bringing together Swiss government and bank executives.
A merger of this magnitude, involving the full or partial winding up of a bank, causing increasing discomfort for investors, would normally take months. UBS will have had a few days.
However, Swiss authorities felt they had no choice but to push UBS to overcome its reluctance, due to enormous pressure from Switzerland’s major economic and financial partners fearing for their own financial centers, Blick said.
“Everything points to a Swiss solution this Sunday. And when the stock market opens on Monday, Credit Suisse could be a thing of the past,” the paper said.
Credit Suisse, the country’s SNB central bank and Switzerland’s financial watchdog FINMA all declined to comment when approached by the AFP about the possibility of a takeover of UBS.
The Swiss government held an urgent meeting to discuss the situation last Saturday in the capital Bern. The government spokesman declined to comment on the talks, reported the Swiss news agency ATS.
An acquisition of this size is dauntingly complex.
UBS would require government guarantees to cover legal fees and potential losses, according to a Bloomberg report, citing unnamed sources.
The SonntagsZeitung newspaper called it “the fusion of the century”.
“The unthinkable becomes reality: Credit Suisse is about to be taken over by UBS,” said the weekly.
The government, FINMA and the SNB “see no other option,” he said.
“The pressure from abroad had become too strong and fears that the Credit Suisse falter could trigger a global financial crisis,” he said.
Like UBS, Credit Suisse is one of 30 banks worldwide recognized as Global Systemically Important Banks, of such importance to the international banking system that they are considered too big to fail.
But the market movement seemed to suggest that the bank was perceived as a weak link in the chain.
“We are now awaiting a definitive and structural solution to the problems of this bank,” French Finance Minister Bruno Le Maire told Le Parisien newspaper. “We remain extremely vigilant.”
According to the Financial Times newspaper, Credit Suisse clients withdrew 10 billion Swiss francs ($10.8 billion) in deposits in a single day late last week, a measure of how much trust in the bank has declined.
After a turbulent week in the stock market, which forced the SNB to step in with a $54 billion lifeline, Credit Suisse was worth just over $8.7 billion on Friday night – precious little for a bank considered a of 30 key institutions worldwide.
FINMA and the SNB have said that Credit Suisse “meets the capital and liquidity requirements” imposed on such banks, but mistrust remains.
Amid fears of contagion after the collapse of two banks in the United States, Credit Suisse’s share price tumbled more than 30% on Wednesday, hitting a new all-time low of 1.55 Swiss francs.
After recovering some ground on Thursday, Credit Suisse shares finished 8% down on Friday at 1.86 Swiss francs apiece as the Zurich-based lender struggled to maintain investor confidence.
Credit Suisse has been plagued by a series of scandals in recent years. The shares were worth 12.78 Swiss francs in February 2021.
In 2022, the bank suffered a net loss of $7.9 billion and expects a “substantial” pre-tax loss this year.
“This is a bank that never seems to put its house in order,” IG analyst Chris Beauchamp commented in a market note this week.
The idea of major Swiss banks joining forces has emerged over the years, but has generally been rejected due to competition concerns and risks to the stability of the Swiss financial system.
“Credit Suisse’s management, even if forced to do so by the authorities, would choose (this option) only if it had no other solution,” said David Benamou, chief investment officer at Paris-based Axiom Alternative Investments.
