Credit Suisse has until Monday morning to calm the markets, with rival UBS being the frontrunner for a takeover.

This weekend is a complete mess. Credit Suisse, the second largest bank in the country, must find ways to calm the markets at all costs before they open on Monday morning. According to press reports, his great rival UBS is becoming a savior. Silence prevails on Saturday from both Credit Suisse and UBS, the number one Swiss bank, which is presented as the preferred buyer in the eyes of the central bank and financial market police.

The Swiss market opens at 8 a.m. GMT on Monday (9 a.m. in Paris), and if nothing convinces investors that a good solution has been found for an institution considered a weak link, it could endure an even bleaker day than Wednesday. March. 15. Shares hit an all-time low of CHF 1.55 (EUR 1.56) and at the close, Credit Suisse had a market valuation of just CHF 7 billion, a straw for the bank, which, like UBS, is part of thirty institutions. in the world. it is important that they fail.

How to calm down?

So how do you calm down? On Friday night, the Financial Times opened the ballroom by announcing that UBS was in talks to take over, in whole or in part, its competitor. The Swiss Central Bank (SNB) “wants to find a simple solution before markets open on Monday,” Business daily said, adding that it is not certain that an agreement will be reached.

According to Bloomberg, citing anonymous sources, UBS requires government agencies to reimburse legal costs and possible losses. One scenario being considered would be a takeover of Credit Suisse to retain only asset and wealth management and resell the investment banking portion, the financial agency said.

Discussions continue about the fate of the Swiss branch of Credit Suisse. This is profitable, in contrast to the group, which lost 7.3 billion Swiss francs last year and expects “substantial” losses again this year.

The branch combines retail banking and SME loans, and another scenario mentioned by analysts in recent days would be to list it on the stock exchange, which could avoid massive layoffs in Switzerland due to duplication with UBS. On Wednesday, investor and partner distrust forced the central bank to extend a CHF50bn (€50.4bn) loan to revitalize the Zurich establishment and calm markets. The respite was short-lived: it would be inexpensive to buy a bank today, but an acquisition of this size is of great difficulty, especially when it is done in a hurry.

Atonement, but of what?

Credit Suisse has just gone through two years marked by several scandals that revealed, by management’s own admission, “significant weaknesses” in its “internal controls.” Finma accused him of “serious breach of his prudential obligations” in the bankruptcy of financial company Greensill, which marked the beginning of his failures.

UBS, after years of recovering from the shock of the 2008 financial crisis, is starting to reap the rewards of its efforts, and on Wednesday its chief executive Ralph Hamers again signaled he wanted to focus on the bank’s strategy and declined to answer a “hypothetical” question about a Credit Suisse takeover. . The Competition Commission can also cause confusion depending on the takeover configuration.

Liquidation of 9000 positions

At the end of October, Credit Suisse unveiled an extensive restructuring plan that included cutting 9,000 jobs by 2025, or more than 17% of staff. The bank, which employed 52,000 people at the end of October, intends to refocus on its most stable operations and radically transform its banking business.

Much of the investment banking business, which has suffered heavy losses, should be consolidated under the First Boston brand and then outsourced. But Morningstar analysts say the restructuring is “too complicated” and not thorough enough.

Analysts at the US bank JP Morgan are considering a radical option: Credit Suisse will “completely” close its investment banking activities.