UBS is seeking guarantees from the Swiss government to cover future risks if it proceeds with the Credit Suisse acquisition.
Bloomberg reports, citing unnamed sources describing private discussions, that UBS is discussing scenarios in which the government would bear certain legal fees or other specific losses in any deal. Switzerland’s biggest bank is exploring buying all or part of its smaller rival, prompted by regulators to stem a crisis of confidence.
In the most likely scenario, the sources said, the deal would involve UBS buying Credit Suisse to acquire its wealth and asset management units, while potentially selling off its investment banking arm.
Talks are ongoing and the goal is to announce a deal between the two banks no later than Sunday night, a source with knowledge of the matter said.
The Financial Times reported that the deal could happen as early as Saturday night.
Representatives for UBS and Credit Suisse declined to comment. A Swiss finance ministry spokesman declined to comment, adding that the government “does not comment on rumours.”
UBS: Its executives do not agree with the acquisition of Credit Suisse
A government-brokered deal would have fixed the Credit Suisse collapse, which sent tremors through the financial system. The “injection” of liquidity from the Swiss central bank briefly dampened the turmoil, but the market drama carries the risk that clients or counterparties will continue to flee, with potential ramifications for the broader industry.
UBS executives had opposed the scenario because they wanted to focus on their own strategy focused on wealth management and were reluctant to take the risks associated with Credit Suisse, Bloomberg reported earlier this week. Credit Suisse has been losing for the past decade and has racked up billions in legal losses.
Credit Suisse had statutory provisions of 1.2 billion Swiss francs at the end of 2022 and said it sees reasonably possible losses adding another 1.2 billion francs to that total, pending various lawsuits and regulatory investigations, according to Bloomberg Intelligence.
Credit Suisse’s market value fell to about 7.4 billion Swiss francs from a 2007 high of more than 100 billion francs. The market value of UBS is 60 billion francs. Its clients pulled more than $100 billion of its assets in the final three months of last year as concerns about their financial well-being grew, and the outflows continued even after its shareholders cashed in a $4 billion capital increase. franks.
A merger between the two Swiss banking giants, whose headquarters face each other on Zurich’s central Paradeplatz square, would be a landmark event for the nation and the global economy.
source: iefi merida