The main Swiss bank, UBS, under pressure from the authorities, is ready to buy its rival, Credit Suissebut at a fraction of its value, at a time when an operation is urgently needed to avoid a contagious wave of panic in the markets on Monday.
Credit Suisse is one of the 30 largest banks in the world and its spectacular stock market crash this week generated nervousness in the financial world, sensitized after the collapse of entities in USA.
LOOK HERE: Credit Suisse: the bank considered “too big to fail” that fell 30% on the stock market
According to the Financial Times newspaper, which was the first outlet to report a possible purchase of Credit Suisse by UBSthe latter would be willing to pay only 1,000 million dollars (930 million euros), a fraction of the stock market valuation that the bank had at the close of the markets on Friday.
This transaction is being analyzed since morning by the federal government in the Swiss capital Bern, after other emergency meetings on Thursday and Saturday.
According to the tabloid clickthe fate of Credit Suisse will be sealed in an extraordinary meeting between the government and the managers of the two entities in Bern.
Such a merger is a complex affair that would normally take months to complete, but under pressure from the authorities, UBS will have to close the deal within a few days.
The Swiss authorities consider that there is no choice but to push UBS to overcome the reluctance, under pressure from Switzerland’s main economic and financial partners, who fear for the stability of their own financial markets, according to Blick.
Swiss banking rules state that UBS should consult its shareholders for a period of six weeks, but emergency measures could be applied for this operation, according to the Financial Times business daily, citing sources who asked to remain anonymous.
MORE INFORMATION: Credit Suisse leads European bank decline in renewed slump by SVB
The Swiss market opens Monday at 0800 GMT and a solution is expected to be found by then as Credit Suisse is perceived as a weak link in the system.
The bank registered a record fall on Wednesday and its stock market value plummeted to 7,000 million Swiss francs, about 7,580 million dollars, which is an almost small sum for an entity considered to be of systemic importance, so its bankruptcy must be avoided. .
According to the Financial Times and Blick, the bank’s clients withdrew 10 billion Swiss francs in deposits in one day at the end of last week, a tangible indication of distrust of the institution.
These negotiations take place after a black week on the stock market in which the Swiss central bank had to intervene and lent Credit Suisse 53.7 billion dollars to give it a breath of fresh air and try to appease the nervousness of investors, without success.
According to the Bloomberg agency, UBS requires public authorities to pay legal costs and potential losses that can amount to billions of Swiss francs.
The negotiation was central on Saturday around the activities of the investment bank, according to the financial agency, and one of the hypotheses to get out of the crisis is that the purchase is partial and leaves this division out.
ALSO SEE: Parent company of seized Silicon Valley Bank files for bankruptcy
At the end of October, Credit Suisse presented a huge restructuring plan that included cutting 9,000 jobs by 2025, representing 17% of its workforce.
The entity, with a workforce of 52,000 people at the end of October, wanted to focus on more stable activities and radically transform its business banking.
For its part, the union of employees of Swiss banks “demanded” on Sunday that their delegates participate in the negotiation, taking into account the “huge” consequences of the operation on the template.
I am Jack Morton and I work in 24 News Recorder. I mostly cover world news and I have also authored 24 news recorder. I find this work highly interesting and it allows me to keep up with current events happening around the world.