UBS reportedly in takeover talks with Credit Suisse amid turmoil

UBS reportedly in takeover talks with Credit Suisse amid turmoil

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Switzerland’s biggest bank, UBS, is reportedly in talks to take over struggling rival Credit Suisse, a move that could ease growing fears that the European banking giant’s turmoil could spill over to the global economy.

The boards of the two largest Swiss banks are meeting this weekend on a proposed merger as early as Saturday evening, according to a report by the Financial Times. The talks are the latest development in more than a week of tumult and fears over the resilience of the global financial system following the shocking collapse of Silicon Valley Bank and subsequent actions by Wall Street and regulators to shore up major institutions. financial.

Top banking regulators in the US, Britain and Switzerland are also considering the legal structure of a deal, as UBS seeks concessions, including some form of government agreement to cover future legal costs. , according to the Financial Times. Credit Suisse shares jumped 7% in after-hours trading.

What to know about the Credit Suisse crisis and its global impact

Credit Suisse and UBS declined to comment. The Swiss National Bank and the US Federal Reserve did not immediately respond to requests for comment.

Germany’s Deutsche Bank is also looking at whether it could acquire some Credit Suisse businesses, according to a Bloomberg News report.

A takeover could limit fears that turmoil at Credit Suisse and several troubled financial institutions in the United States could create banking contagion, similar to the events of the 2008 financial crisis. Even after the actions of governments and institutions financials this week, the stock market showed lingering concern that the tumult in the banking sector has not subsided. Still, experts say the financial system appears to be on solid footing, and stock market volatility could reflect news rather than a signal of a broader crisis.

The talks follow a week of chaos for Credit Suisse. The Swiss central bank on Thursday provided the company with a $53.7 billion lifeline, after the bank revealed “significant weaknesses” in its financial reports.

But Credit Suisse’s underlying problems began long before the recent problems at banks in the United States. The 167-year-old bank, which originally served the ultra-wealthy, suffered financial losses, risk and compliance issues and a critical data breach. Credit Suisse revealed in October that it had suffered large client withdrawals and in 2021 suffered significant losses due to its exposure to the collapse of New York-based Archegos Capital Management.

The moves in Europe follow Thursday’s announcement that 11 of the largest banks in the United States would deposit $30 billion in First Republic Bank. The move was intended to strengthen the bank and send a signal about the broader security of the US financial system. Meanwhile, Silicon Valley Bank’s parent company filed for Chapter 11 bankruptcy on Friday.

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