It followed a weekend of intense negotiations between the two banks, the government, the central bank and the regulator.
Swiss bank UBS has agreed to buy ailing rival Credit Suisse for just over $2 billionafter a weekend of intense negotiations between the two banks, the government, the central bank and the regulatory body, the Financial Times newspaper published today.
As part of the agreement, the parties involved have agreed a change in legislation to prevent this purchase decision from being put to a vote by UBS shareholders, according to the source.
The Swiss Executive has announced a press conference in the next few hours, supposedly with the intention of announcing the agreement, for which the purchasing bank I would have demanded several guarantees.
While UBS was valued this Friday at market close at 56,000 million, its competitor was around 8,000 million capitalization. That means that UBS will pay almost a quarter of what it was worth on the Credit Suisse Stock Exchange just a couple of days ago.
The pact creates one of the largest banks in Europe, and serves to put an end to the crisis of confidence that was bleeding Credit Suisse dry. The Zurich-based entity already saw deposit leaks in the last quarter of 2022.
Although the Swiss National Bank insisted this week that it was broadly meeting capital and liquidity requirements, customer fears that the bank’s situation would worsen with their savings inside was fueling further money flight amid the tidal wave of reports. negative.
That has made Credit Suisse’s continuation on its own untenable. The brand has gone from being synonymous with reliability to become a source of suspiciondamaging the reputation of the once unblemished Swiss banking, and becoming a liability for the entire sector.
The merger of the two banking giants, which are part of the group of 30 banks considered key in the global financial system, should be completed and announced in time for the opening of the Asian markets.
The hope is that the announcement be enough to prevent a general panic.
The banking sector has been under strain since major central banks raised rates sharply in an attempt to control inflation.
Many institutions failed to prepare after years of access to cheap money.
The failure of Silicon Valley Bank in the United States and other regional banks increased investor anxiety and caused the crisis in other entities considered weak.
This is the case of Credit Suisse, which has been immersed in various scandals for two years that it failed to resolve despite the efforts of its management, which announced a three-year restructuring plan.
The Swiss central bank on Wednesday announced a 50 billion Swiss franc ($54 billion) bailout package after a black day on stocks but the move only gave the bank a brief respite.
Regulators and the federal government acted under immense pressure from major partnerss of Switzerland to clean up the situation before it spread to the whole world.
According to the Financial Times and Blick, the bank’s customers withdrew 10 billion Swiss francs ($10.8 billion) in deposits in a single day at the end of last week.
According to Bloomberg, UBS has demanded that the government bear legal costs and potential losses, which could run into billions of francs.
UBS, which took several years to recover from the 2008 financial crisis and a massive state bailout, You are beginning to reap the rewards of your efforts.
That is why it took a lot of effort on the part of the authorities before the bank’s management agreed to take on the role of rescuer for Credit Suisse.
On Sunday, the Swiss bank employees’ union “demanded” the involvement of the social partners in the discussions, given the “huge” stakes in the purchase, which could mean massive job losses.