Switzerland’s largest bank, UBS, under pressure from the authorities, is ready to buy rival Credit Suisse, but for only a fraction of its value, according to financial time. But time is running out to avoid a debacle and a wave of contagious panic in the markets this Monday, March 20.
A first offer rejected by Credit Suisse
According to the British newspaper, UBS would be willing to pay only 1,000 million dollars (930 million euros). An offer rejected by Credit Suisse with the support of its main shareholder the Saudi National Bank, according to Bloomberg.
The transaction would only be in shares, explains the financial times at a price of 25 cents per Credit Suisse share, when it was still worth 1.86 francs at Friday’s close, for a total valuation of just under 9 billion.
The transaction has been examined in Bern by the federal government since the beginning of the morning, and was already urgently met on Thursday and Saturday.
According to the Blick tabloid, it is in the Federal Capital where the agreement must be sealed again this Sunday during an extraordinary meeting of federal advisors and leaders of the two banking giants.
The merger between these banking giants, which are part of the very closed club of 30 banking establishments that are too important for the global financial system to let them sink, must in any case be finalized before the opening of the Stock Market at 08:00. :00:00 GMT on Monday, to avoid a wave of panic.
Pressure
Swiss authorities have constantly pressured UBS to overcome its reluctance, because they themselves are subject to a performance obligation from partners who fear for their own financial center, says the Swiss daily Blick.
According to the Financial Times and Blick, the bank’s clients withdrew 10 billion Swiss francs in deposits in a single day late last week. And this despite 50 billion francs in an emergency loan from the Swiss central bank.
Bank managers should also be exempted from the obligation to consult shareholders, says the Financial Times.
public guarantees
According to the Bloomberg agency, UBS requires public authorities to bear legal costs and potential losses that can amount to billions of francs.
On Saturday, the discussions stumbled upon investment banking, according to the financial agency, one of the scenarios being studied being a recovery solely of asset and wealth management with a sale of investment banking.
Discussions also center on the fate of Credit Suisse’s Swiss branch, one of the profitable parts of the group that lost 7.3 billion Swiss francs last year and still has “substantial” losses in 2023.
This branch brings together retail banking and credit to SMEs. One avenue being considered by analysts is an initial public offering, which could limit layoffs in Switzerland due to duplication with UBS activities.
On Sunday, the union of bank employees in Switzerland “demanded” on Sunday the participation of the social partners in the discussions, given the “enormous” stake for employment.
What about the Competition Commission?
Credit Suisse has just experienced two years marked by several scandals that revealed, according to the management’s own admission, “substantial weaknesses” in its “internal control”. The market policeman had accused him of having “seriously failed in his prudential obligations.”
By contrast, UBS, which spent several years recovering from the shock of the 2008 financial crisis and a massive state bailout, is beginning to reap the rewards of its efforts.
The Competition Commission could also draw attention depending on the configuration of the acquisition.
faster stronger
At the end of October, Credit Suisse had presented a comprehensive restructuring plan that foresees the elimination of 9,000 positions by 2025, that is, more than 17% of its workforce.
The bank, which employed 52,000 people at the end of October, plans to separate investment banking from the rest of its activities to refocus on its more stable parts, including wealth management.
But as Blick points out: “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.”
Source: BFM TV
