UBS is offering to buy Credit Suisse for up to $1 billion, the Financial Times reports


A customer walks into an ATM at a bank branch of Credit Suisse Group AG in Geneva, Switzerland on Thursday, September 1, 2022.

Jose Cendon | Bloomberg | Getty Images

Swiss banking giant UBS offered to buy its embattled rival on Sunday Credit Switzerland for up to $1 billion, according to the Financial Times, citing four people with direct knowledge of the situation.

The deal, which could be signed as early as Sunday night, according to the FT, values ​​Credit Suisse at about $7 billion less than its market value at the end of Friday.

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The FT said UBS had offered a price of 0.25 Swiss francs ($0.27) per share, payable in UBS shares. Credit Suisse shares closed at 1.86 Swiss francs on Friday. Due to the fast-paced nature of the negotiations, the terms of a final deal may differ from those reported.

Credit Suisse is reportedly hesitant about the offer, arguing it is too low and would harm shareholders and employees, those in the know told Bloomberg.

Credit Suisse and UBS declined to comment on the reports when contacted by CNBC.

Swiss authorities are also reportedly considering full or partial nationalization of the bank as an alternative to its acquisition by UBS, according to a Bloomberg report on Sunday.

The UBS deal is being orchestrated quickly, so the Swiss are preparing in case it doesn’t go through, Bloomberg said, citing people in the know. The country is reportedly considering whether to take over the bank outright or keep a significant equity stake.

UBS’s bid comes after shares of Credit Suisse posted their worst weekly drop since the start of the coronavirus pandemic, despite an announcement that it would access a loan of up to 50 billion Swiss francs ($54 billion) from the Swiss central bank .

It has already suffered a series of losses and scandals, and last week sentiment was again shaken by the collapse of Silicon Valley Bank and the closure of Signature Bank in the US, sending shares down.

Credit Suisse’s size and potential impact on the global economy far exceeds that of US banks. The Swiss bank’s balance sheet is about twice that of Lehman Brothers when it collapsed, at about 530 billion Swiss francs as of the end of 2022. It is also much more globally connected, with multiple international subsidiaries, ensuring orderly management. of Credit Suisse’s situation even more important.

Credit Suisse lost about 38% of its deposits in the fourth quarter of 2022 and revealed in its delayed annual report early last week that the outflows have yet to be reversed. It reported a full-year net loss of CHF 7.3 billion for 2022 and expects a further “significant” loss in 2023.

The bank had previously announced a major strategic overhaul to address these chronic issues, with current CEO and Credit Suisse veteran Ulrich Koerner taking over in July.

This is an evolving story. Check back later for updates.

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