UBS Considers Acquiring Credit Suisse
Swiss Banking Giants UBS and Credit Suisse Consider Historic Merger Amid Crisis
The boards of directors of UBS and Credit Suisse, Switzerland's two largest banks, are set to meet separately this weekend to discuss a potential merger, according to multiple sources cited by the Financial Times. The talks, coordinated by the Swiss National Bank and the Swiss banking regulator Finma, aim to strengthen confidence in the national banking sector.
The discussions come after Credit Suisse received a $54 billion emergency loan from the Swiss central bank. Despite this aid, the bank's share value continued to decline, and clients pulled more than $100 billion of assets in the last three months of the previous year. Credit Suisse's market value now stands at around $8 billion, compared to UBS's $56.6 billion.
Swiss regulators are pushing UBS to consider various ways to be involved with a solution for Credit Suisse. A number of different options are being assessed, and both sides are evaluating regulatory constraints in different jurisdictions. UBS is also analyzing possible risks that such a deal carries for its business. The central bank aims to reach an agreement on a simple and immediate solution before the markets open on Monday.
A government-brokered deal between the two Swiss banking giants, which are both globally systemically relevant, would be an historic event for the nation and global finance. UBS and Credit Suisse have developed a global rivalry that leverages Switzerland's reputation for discreet management of wealth. The banks are interlinked through frequent exchanges of executives from one side of Zurich's central Paradeplatz square to the other.
If an arranged combination is not reached, Credit Suisse could pursue a breakup of the lender, with the wealth management business going to UBS, the Swiss unit being separated as a new entity to protect Swiss deposits, and the asset management and investment banking operations being divested or separated. The situation remains fluid and could change, as executives at both UBS and Credit Suisse had been opposed to an arranged combination earlier this week.
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