UBS the Swiss banking giant, offered to purchase its embattled rival Credit Suisse at up to $1Billion according the Financial Times. This was citing four people who had direct knowledge of the matter.
According to the FT, the deal could be signed by Sunday evening. Credit Suisse’s market value is $7 billion lower than Friday’s close.
According to the FT, UBS offered 0.25 Swiss Francs ($0.27) per share in UBS stock. Credit Suisse shares closed Friday at 1.86 Swiss Francs. Due to the fast-moving nature the negotiations, any terms of an end deal could differ from what was reported.
Credit Suisse is said to be refusing the offer. However, people who have knowledge of the matter stated that it was too low and would harm shareholders and employees.
CNBC reached out to UBS and Credit Suisse for comment.
According to a Sunday Bloomberg report, Swiss authorities may also consider partial or full nationalization of the bank to replace the UBS takeover.
Bloomberg reported that the UBS deal is being done quickly and the Swiss are prepared for any eventuality. According to reports, the country is considering whether it would completely take over UBS or retain a substantial equity stake.
UBS’s offer came after Credit Suisse shares experienced their worst weekly decline in the wake of the coronavirus pandemic. This was despite the announcement by the Swiss central bank that it would be able to access a loan up to 50 billion Swiss Francs ($54 Billion).
It was already struggling with a string losses and scandals. Last week, sentiment was shaken again by the collapse of Silicon Valley Bank, as well as the closing of Signature Bank in the U.S. which sent shares plummeting.
Credit Suisse’s potential impact on the global economic landscape and its size is greater than those of the U.S. banks. Lehman Brothers collapsed at twice the size of Credit Suisse’s balance sheet, which was around 530 billion Swiss Francs by end-2022. Credit Suisse is more interconnected globally, as it has multiple international subsidiaries. This makes it even more crucial to manage its situation.
Credit Suisse lost 38% of its deposits during the fourth quarter 2022. It revealed this in its delayed annual reports , which was published early last week , that outflows are still to reverse. It reported a net loss of 7.3 million Swiss francs in the full year 2022, and anticipates another “substantial loss” in 2023.
In July , Credit Suisse veteran Ulrich Koerner will take over as CEO.
