UBS Group AG has offered to buy Credit Suisse—a rival Swiss bank facing economic uncertainty—in a deal worth roughly $1 billion, according to several reports Sunday, as bank executives and Swiss officials sprint to contain a crisis sparked in part by the collapse of two major U.S. banks last week.
The Swiss government is set to announce the deal soon, according to the New York Times, with a reported goal of completing the merger before Asian markets open Monday morning.
However, the Financial Times reported there is no guarantee a deal will be reached, and Bloomberg reported that Credit Suisse pushed back on the deal because the offer was too low.
If the deal is closed, it would represent a significant discount: UBS would pay $0.27 (or 0.25 Swiss Francs) per share in stock, according to the Financial Times, compared to Credit Suisse’s $2.01 share price when markets closed Friday.
The Swiss government is expected to speed the deal up by waiving the six-week-long waiting period normally required before a merger, according to the New York Times, and Swiss authorities are set to change laws to not require a shareholder vote to quicken the deal, the Financial Times reported.
UBS stipulated a 100-basis-point drop in its credit default spreads—a measure of how much it costs to insure the bank against default—would represent a material adverse change that would void the deal, according to the Financial Times.
$54 billion. That’s how much Credit Suisse borrowed from the Swiss National Bank on Thursday. The central bank offered to provide liquidity to Credit Suisse “if necessary” hours earlier, but the bank’s share price still slid almost 7% the following day.
Shares of Credit Suisse have plummeted in recent weeks, and trading was halted Wednesday after the share price fell up to 21%. On Tuesday, the bank said it had suffered “material weakness” in its 2021 and 2022 financial reporting processes. In response, its biggest backer, the Saudi National Bank, said it wouldn’t buy any more shares in Credit Suisse. With the recent collapses of Silicon Valley Bank and Signature Bank in the U.S., uncertainty has spread that wider financial issues could be caused worldwide—concerns that intensified after warning signs appeared at Credit Suisse. The bank’s downturn isn’t linked to SVB and Signature, and its problems predate the current crisis—it ended the 2022 fiscal year with a loss of nearly $8 billion. The bank itself and some of its executives and advisers have also recently been linked to scandals, including fraud and failing to prevent money laundering.
What’s Happening With Credit Suisse, Explained: Embattled Bank Rattles Stock Market As Banking Crisis Deepens (Forbes)
UBS offers to buy Credit Suisse for up to $1bn | Financial Times (Financial Times)
UBS Nears Deal to Buy Credit Suisse – The New York Times (New York Times)
Credit Suisse Said to Push Back Against UBS’s $1 Billion Offer (Bloomberg)
UBS Offers $1 Billion to Buy Credit Suisse (Wall Street Journal)
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