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19 Mar, 2023 12:33

Potential buyer seeks guarantees for Credit Suisse – Reuters

UBS reportedly wants the Swiss state to partly cover the acquisition of the failing lender
Potential buyer seeks guarantees for Credit Suisse – Reuters

Multinational investment bank UBS wants the Swiss government to cover about $6 billion of the costs if it agrees to buy Credit Suisse, a rival lender whose shares plummeted this week amid customer outflows and a loss of investors, Reuters reported on Saturday, citing sources.

Earlier media reports indicated that the banks were discussing a merger, an idea pitched by the Swiss National Bank and Financial Market Supervisory Authority (FINMA), to save Credit Suisse from insolvency.

The government funds are expected to help cover the cost of winding down parts of Credit Suisse following the merger, as well as potential litigation charges, sources told Reuters. However, the negotiations on the deal are reportedly tense, as the merger may lead to some 10,000 jobs needing to be cut.

According to a report by The Wall Street Journal, the deal could be announced on Sunday. The news outlet also notes that, in order to speed up the merger process, regulators had offered to waive a requirement that a shareholder vote be held.

Analysts say that Swiss regulators need to present a solution to the crisis at Credit Suisse before markets open on Monday, to avoid a further drop in the lender’s stock price.

The two banks, as well as the Swiss government, have so far declined to comment on the reports.

Credit Suisse shares lost roughly a quarter of their value during the past week, despite having secured a $54 billion loan from the Swiss central bank. The bank is Switzerland’s second largest, behind USB, and is considered systemically important both in Switzerland and globally. Banking experts warn that the bank’s failure would affect the entire global financial system.

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