UBS is in talks to take over Credit Suisse in whole or in part, with the boards of two of Switzerland’s biggest lenders meeting separately over the weekend to consider what the banking combination would bring. the biggest outcome for Europe since the financial crisis, according to multiple people briefed on the talks.
Residents say the Swiss National Bank and regulator Finma are arranging talks aimed at bolstering confidence in the country’s banking sector. Their intervention comes days after the central bank was forced to provide an emergency line of credit of SFr50 billion ($54 billion) to Credit Suisse.
However, this has failed to stem the plunge in its share price, which has fallen to a record low after its biggest investor ruled out providing more capital and its chairman. acknowledges that an exodus of wealth management clients continues.
The share price performance of Swiss lenders has varied significantly in recent years. Over the past three years, shares of UBS have risen about 120% while shares of its smaller rival have fallen about 70%. The former had a market capitalization of $56.6 billion, while Credit Suisse closed Friday at $8 billion.
In 2022, UBS generated $7.6 billion in profits, while Credit Suisse earned loss of $7.9 billionwipe out the entire income of the previous decade.
Swiss regulators told their US and UK counterparts on Friday night that merging the two banks is a “plan A” to prevent a collapse in investor confidence in Credit Suisse , one of the people said.
Several options beyond a full takeover are being discussed, another added, adding that both sides are trying to assess legal constraints in different jurisdictions. The person added that UBS is also analyzing the potential risks of a deal.
The Swiss central bank wants lenders to agree on a simple and straightforward solution before markets open on Monday, a source said. There is no guarantee that an agreement that requires the approval of UBS shareholders will be reached.
Credit Suisse and UBS declined to comment, as did the Swiss National Bank, the Federal Reserve and the Bank of England.
A full merger would create one of the most important financial institutions with the largest global system in Europe. UBS has $1.1 trillion in total assets on its balance sheet and Credit Suisse has $575 billion.
However, such a large deal may prove too difficult to execute. The Financial Times has previously reported that other options under consideration include a Credit Suisse split and raising capital through a public offering of its hedged Swiss division, with asset managers. property and assets sold to UBS or other contractors.
UBS has been put on high alert for an emergency bailout call from the Swiss government after investors became wary of Credit Suisse’s most recent restructuring. Last year, chief executive Ulrich Körner announced plans to cut 9,000 jobs and spin off much of his investment banking into a new entity called First Boston, led by former board member Michael Klein operating.
A potential takeover by its biggest rival would last almost three years scandal and chaos at Credit Suisse 167 years old. The dual crises involving financial professional group Greensill Capital and family office Archegos — both of which collapsed within weeks in 2021 — resulted in billions of dollars in losses.
The lender was also fined for its role in the $2 billion “tuna bond” scandal in Mozambique and was the first Swiss bank to be found guilty of a corporate crime after it was found to have committed a crime. money laundering for a Bulgarian cocaine cartel run by a former professional. wrestler.
Meanwhile, Credit Suisse has suffered a significant management change. Former chief executive Tidjane Thiam stepped down in 2020 after a spy scandal and neighborhood dispute with subordinates scandalized Zurich.
A year later, António Horta-Osório was appointed president. The former boss of Lloyds Bank was brought in to clean up the culture of the Swiss lender. He was forced to quit his job in early 2022 for using too many corporate jets and violating Covid-19 isolation rules to watch the UEFA European Cup final and the tennis final. men’s Wimbledon on the same day.
Additional reporting by Robert Smith
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