UBS nears deal to buy Credit Suisse

ZURICH — United Bank of Switzerland was up against the clock on Sunday in talks to finalize a mammoth takeover of its troubled rival Swiss bank Credit Suisse and reassure investors before the markets reopened.

The Financial Times reported on Sunday that UBS has offered to buy Credit Suisse for up to $1 billion.

Authorities are scrambling to resolve a crisis of confidence in the 167-year-old Credit Suisse, the globally significant bank caught in the turmoil spurred by the collapse of the US lenders Silicon Valley Bank and Signature Bank over the past week.

Switzerland's biggest bank UBS is being urged by the authorities to get a deal over the line, in an effort to avoid a wave of contagious panic on the markets on Monday.

The wealthy Alpine nation's largest banks were in urgent negotiations this weekend with the country's banking and regulatory authorities, several media outlets reported.

The generally well-informed tabloid Blick said UBS would buy Credit Suisse in a deal set to be sealed on Sunday during an exceptional meeting in capital Bern, bringing together the Swiss government and banks' executives.

A merger of this scale, involving swallowing up all or part of a bank, arousing growing investor unease, would normally take months. UBS will have had a few days.

However, the Swiss authorities felt they had no choice but to push UBS into overcoming its reluctance, due to the enormous pressure exerted by Switzerland's major economic and financial partners, fearing for their own financial centers, said Blick.

"Everything points to a Swiss solution this Sunday. And when the stock market opens on Monday, Credit Suisse could be a thing of the past," the newspaper said.

Credit Suisse, the country's SNB central bank and the Swiss financial watchdog FINMA all declined to comment when contacted about the possibility of a UBS takeover.

The Swiss government held an urgent meeting to discuss the situation late on Saturday in Bern. The government's spokesman refused to comment on the talks, the Swiss news agency ATS reported.

An acquisition of this size is dauntingly complex.

UBS would require public guarantees to cover legal costs and potential losses, according to a report by Bloomberg, citing anonymous sources.

The SonntagsZeitung newspaper called it "the merger of the century".

"The unthinkable becomes true: Credit Suisse is about to be taken over by UBS," the weekly said.

The government, FINMA and the SNB "see no other option", it said.

Too big to fail

Like UBS, Credit Suisse is one of 30 banks around the world deemed to be Global Systemically Important Banks — of such importance to the international banking system that they are deemed too big to fail.

But the market movement seemed to suggest the bank was being perceived as a weak link in the chain.

"We are now awaiting a definitive and structural solution to the problems of this bank," French Finance Minister Bruno Le Maire told the newspaper Le Parisien. "We remain extremely vigilant."

According to the Financial Times, Credit Suisse customers withdrew 10 billion Swiss francs ($10.8 billion) in deposits in a single day late last week — a measure of how far trust in the bank has fallen.

After a turbulent week on the stock market, which forced the SNB to step in with a $54 billion lifeline, Credit Suisse was worth just over $8.7 billion by Friday evening — precious little for a bank considered one of 30 key institutions worldwide.

Agencies via Xinhua