UBS in talks to buy Credit Suisse – report

GENEVA: According to the Financial Times (FT), Switzerland’s largest bank, UBS, is in talks to buy all or part of Credit Suisse.

Credit Suisse, Switzerland’s second-biggest bank, came under pressure this week as the bankruptcy of two regional US lenders rocked the sector. By the close of markets on Friday, its shares were down 8 percent.

The Swiss National Bank (SNB) and financial watchdog Finma have told their US and UK counterparts that their “Plan A” to end the crisis of confidence faced by Credit Suisse is to merge it with UBS, the FT reported Friday. citing unnamed sources.

The Swiss central bank “wants lenders to agree on a simple and straightforward solution before markets open on Monday,” the source said, while acknowledging that “there are no guarantees” for the deal.

UBS wants to assess what risks a full or partial takeover of a competitor could pose to its own business, another source told the FT.

When contacted by Agence France-Presse (AFP), both SNB and Credit Suisse declined to comment, while UBS and Finma did not respond immediately.

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Credit Suisse, which has been in crisis for two years now, is seen as a weak link in the banking sector due to a series of scandals and a massive restructuring program launched in October last year.

Its market value has been hit hard this week by contagion fears from the collapse of two U.S. banks – Silicon Valley Bank and Signature Bank – along with the release of an annual report citing “significant weaknesses” in internal controls.

But shares fell to historic lows on Wednesday after its major shareholder, the National Bank of Saudi Arabia, said it would not increase its stake in the group due to regulatory restrictions.

By Wednesday evening, the SNB stepped in with a $53.7 billion lifeline to shore up the group.

The takeover of UBS was also floated this week by analysts at JP Morgan, calling it the “most likely” scenario.

The idea of ​​joining forces between Switzerland’s largest banks regularly pops up, but is usually dismissed due to competition issues and risks to the stability of the Swiss financial system, given the size of the bank that would be created from such a merger.