UBS reaches agreement to buy Credit Suisse after upping offer: report

The Swiss government is reportedly set to announce a deal on Sunday that would allow Switzerland’s biggest bank UBS to buy its beleaguered rival Credit Suisse for $2 billion, according to the Financial Times.

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The announcement is causing contagion in the banking sector amid growing concerns over the possible collapse of Credit Suisse. Credit Suisse saw its share price slide last week despite receiving a $54 billion financial lifeline from the Swiss National Bank to shore up its liquidity and deposit outflows continued. The news of the deal was first reported by the Financial Times.

Regulators faced a sense of urgency to push through the deal on Sunday before the market opened on Monday, as the prospect of Credit Suisse potentially failing next week dominated talks. Credit Suisse, which has been in business for 167 years, is one of 30 globally systemically important banks, raising concerns about how global financial markets will react to its blowout.

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Credit Suisse faces lawsuits from US shareholders for allegedly hiding financial woes

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Talks about UBS’s potential takeover of Credit Suisse heated up over the weekend and the Swiss government’s financial regulators gave it the green light after coming to an agreement on the more complex terms of the deal.

As a large global financial institution, Credit Suisse has an investment banking arm in addition to a local retail bank that it has tried to spin off in recent years. The acquisition by UBS of those divisions of Credit Suisse, in whole or in part, could create additional regulatory complexity for the firm given its activities in those areas.

Credit Suisse shares hit record low

Terms of the deal could be revealed later on Sunday at a press conference that was announced by Swiss authorities earlier in the day.

The layoffs are likely because Credit Suisse previously pledged to cut 9,000 jobs as part of its restructuring and the bank has investment and local banking divisions that overlap with UBS’s operations.

Bloomberg reported that Credit Suisse balked at UBS’s initial offer of $1 billion, arguing that it fell far short of the firm’s valuation, which stood at about $9.5 billion as of Friday, and that it could harm the bank’s staff and employees. Shareholders will suffer loss. The size of UBS’ offer was first reported by the Financial Times.

Credit Suisse sheds nearly 25%, major backer says no more money

UBS has a balance sheet of about $1.1 trillion — nearly twice the size of Credit Suisse — and has been more resilient than Credit Suisse in the years since the 2008 global financial crisis.

anchor	Security	Last	Change	Change %
C	Credit Suisse Group AG	2.01	-0.14	-6.73%
UBS	UBS Group AG	18.20	-1.05	-5.48%

Credit Suisse’s distressed financial condition stemmed from billions of dollars lost on investments and fines imposed by regulators. Its assets are expected to decline from $1.2 trillion in the third quarter of 2008 to $576 billion in the fourth quarter of 2022.

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It is currently facing class action lawsuits from US shareholders who allege that the company’s leadership made false and misleading statements about the status of depositor outflows last year.

The lawsuits also allege that bank officials failed to timely disclose material weaknesses in the firm’s internal financial controls, which made them “not effective” in 2021 and 2022, as revealed in the bank’s latest annual report. has come.

Fox Business’ Michael Lee and Andrew Miller and Reuters contributed to this report.