Credit Suisse is waiting for a fateful weekend. Will UBS come up with a rescue proposal?
The fate of Credit Suisse could be decided in the next 24 hours after a hot week for Switzerland’s second largest bank.
Local media reported that the Swiss cabinet met for a crisis meeting at 5:00 pm local time (12:00 pm ET) on Saturday at the finance ministry to discuss the bank’s future as reports surfaced of a possible takeover of the ailing bank by its biggest Swiss competitor . , UBS
Investors and clients withdrew their money from Credit Suisse in the last few days turmoil gripped the global banking industry after the collapse of two American creditors.
The bank’s shares lost 25% in a week despite a $54 billion emergency loan from the Swiss National Bank. The price of financial contracts designed to protect investors from possible losses on its bonds soared to record levels. More than $450 million was withdrawn from European and US funds managed by the bank Monday through Wednesday, according to Morningstar.
The lifeline from the Swiss central bank, announced late Wednesday after shares fell to a new record low, was bought only by Credit Suisse.
Reuters and the Financial Times, citing people familiar with the matter, said Swiss regulators are urging banks to negotiate a deal before markets open on Monday to bolster confidence in the country’s banking system. The FT reports that the boards of directors of UBS and Credit Suisse are expected to meet separately over the weekend.
Credit Suisse and UBS declined to comment to Reuters.
(BLACK)which owns 4% of Credit Suisse, denied a separate report in the Financial Times that it was preparing an alternative offer for all or part of the beleaguered bank.
“BlackRock is not involved in, and has no interest in, any plan to acquire all or any portion of Credit Suisse,” a BlackRock spokesperson told CNN.
Credit Suisse, one of the 30 largest banks in the global financial system, was on the ropes for years after a series of scandals, huge losses and strategic mistakes. Its shares are down 75% in the past 12 months. But the crisis of confidence quickly escalated this month.
The collapse of Silicon Valley Bank last week, the largest U.S. bank since the 2008 global financial crisis, forced investors to flee from other players deemed weak.
Then Credit Suisse dropped another bomb. In publishing its annual report on Tuesday, the 167-year-old bank acknowledged a “significant weakness” in its financial statements, adding that it failed to adequately identify potential risks to its financial statements.
The next day, its largest shareholder, the National Bank of Saudi Arabia, signaled that it would no longer invest in the bank, having spent $1.5 billion last year for a share of almost 10%. This scared investors.
In a note Thursday, banking analysts at JPMorgan wrote that a UBS takeover was the most likely outcome.
UBS is likely to spin off Credit Suisse’s Swiss business as the combined market share would be around 30% of Switzerland’s domestic banking market and would mean “too much concentration risk and market share control,” they added.
— Anna Cuban and Rob North contributed to this article.