UBS offers to buy Credit Suisse for $1bn in race the save the bank

A sign of Credit Suisse is seen behind a clock at the headquarters of Switzerland's second-biggest bank in Zurich on March 18, 2023. - Switzerland's largest bank, UBS, is in talks to buy all or part of Credit Suisse, according to a report by the Financial Times. Credit Suisse came under pressure this week as the failure of two US regional lenders rocked the sector. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images) - FABRICE COFFRINI/AFP via Getty Images

A sign of Credit Suisse is seen behind a clock at the headquarters of Switzerland’s second-biggest bank in Zurich on March 18, 2023. – Switzerland’s largest bank, UBS, is in talks to buy all or part of Credit Suisse, according to a report by the Financial Times. Credit Suisse came under pressure this week as the failure of two US regional lenders rocked the sector. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images) – FABRICE COFFRINI/AFP via Getty Images

UBS has offered to buy Credit Suisse for up to $1bn as Swiss officials race to save the troubled lender.

The all-share deal could be signed as soon as Sunday, the Financial Times reported, though Credit Suisse was reportedly unhappy with the deeply discounted offer.

The Swiss government was said to be planning to change the country’s laws to bypass a shareholder vote on the transaction in a bid to speed it through. Officials are racing to secure a deal before markets open on Monday, fearing another sharp drop in Credit Suisse’s share price.

Swiss officials have turned to UBS to engineer a rescue deal that would keep the bank within national control.

However, UBS is wary about taking on the troubled lender without full knowledge of its business.

Credit Suisse was also said to be unhappy with the takeover offer made by its rival, Bloomberg reported.

UBS is offering 0.25 Swiss francs ($0.27) per Credit Suisse share, well below Friday’s closing price of 1.86 Swiss francs and all but wiping out the bank’s existing shareholders.

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

Authorities have been scrambling to rescue the 167-year-old bank, which is among the world’s largest wealth managers.

Credit Suisse shares lost a quarter of their value in the last week and the bank was forced to ask the Swiss National Bank to backstop it with up to £44bn.

Despite the central bank agreeing, Credit Suisse continued to suffer sustained withdrawals and signs of financial stress late last week as banks and customers raced to cut ties.

The front page of Swiss newspaper NZZ am Sonntag carried the headline “The last days of Credit Suisse” over an illustration of the bank’s headquarters in flames on Sunday.

As one of 30 global systemically important banks, Credit Suisse’s failure would ripple throughout the entire financial system.

US authorities are working with their Swiss counterparts to help broker a deal, Bloomberg reported.

Sky News said the Bank of England has indicated it would back the proposed takeover of Credit Suisse.

UBS has asked the Swiss government for $6bn to cover potential losses on the deal, Reuters said. The guarantees would cover the cost of winding down parts of Credit Suisse and potential litigation costs.

The bank also wants to insert a clause that would allow UBS to back out if UBS’s credit default swaps jump beyond a certain level, which would signal that investors are nervous about its financial situation.

The frenzied weekend negotiations over the future of Credit Suisse follow a brutal week for banking stocks following the collapse of US lenders Silicon Valley Bank and Signature Bank.

Source: https://finance.yahoo.com/news/ubs-offers-buy-credit-suisse-131148649.html