UBS, the largest Swiss bank, offers 1,000 million dollars (about 930 million euros) to acquire the second largest entity in the Swiss country, Credit Suisse, in a deep crisis that has shaken the European financial sector for the last week. According to the Financial Times, the deal could be closed as late as Sunday night, before the markets open on Monday. If the agreement is not certified and there is still uncertainty regarding the future of the bank, Credit Suisse is expected to continue to lose market value. UBS’s offer calls for paying 0.27 Swiss francs per share, while Credit Suisse’s share was valued at 1.86 Swiss francs on Friday.
If sealed, the pact would create one of the largest banks in Europe, and would serve to end the crisis of confidence that was bleeding Credit Suisse dry. The Zurich-based entity already saw deposit leaks in the last quarter of 2022. Although the Swiss National Bank insisted this week that it was broadly meeting capital and liquidity requirements, fears from customers that the bank’s situation would worsen with their savings inside has fueled further money flight amid the tidal wave of reports. negative. The brand has gone from being synonymous with reliability to becoming a source of suspicion, damaging the reputation of the once unimpeachable Swiss bank, and becoming a liability to the entire sector.
The agreement is of such importance that the Swiss government itself is participating in the talks. The Swiss Executive is willing to allow UBS to skip some rules so that the merger between the two largest entities in the country can become a reality as soon as possible. Specifically, the government would put in place emergency measures so that UBS could ignore the obligation to give a six-week consultation period to shareholders.
According to the Reuters agency, UBS would be looking to obtain government guarantees worth 6,000 million dollars (5,600 million euros), and the merger would mean 10,000 layoffs.
The speed at which events happen is frantic. Discussions are accelerating just two days after the Swiss National Bank agreed to grant Credit Suisse loans of up to 50 billion euros. The public bailout was initially seen by investors as a powerful lifeline that would keep the bank afloat in the short term. The movement became necessary after its main shareholder, the Saudi National Bank (SNB), threw a jug of cold water by announcing that it would no longer provide more funds, thus leading to a collapse in the stock market. Its titles recovered a good part of the ground lost in the session on Thursday, the day the injection of liquidity from the central bank was known, but the doubts did not take long to return, and the new blow to the action this Friday, of 8%, which dragged down the main stock indices in Europe and the US, made it clear that the perception of the bank is still far from positive.
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