UBS bank in the running to buy Credit Suisse and avoid a debacle
An agreement could be reached as early as Saturday evening.
Switzerland's largest bank, UBS, pushed by the authorities, must absolutely finalize this Sunday the takeover of its rival Credit Suisse to hope to avoid a debacle and a wave of contagious panic on the markets on Monday.
UBS will buy Credit Suisse and the deal will be sealed on Sunday during an extraordinary meeting of the government and the leaders of the two banking giants in Bern, the tabloid Blick, generally reported on Saturday. well-informed.
A merger of the two largest banks in the country, one of which is attracting growing investor suspicion, is a complex affair that normally could take months. UBS will have had a few days.
But the Swiss authorities have no choice but to push UBS to overcome its reluctance, due to the enormous pressure exerted by Switzerland's major economic and financial partners who fear for their own financial center, says Blick.
The US Treasury had also indicated that it was following the case closely.
< p class="e-p">The Swiss market is due to open at 8 a.m. Monday and a viable solution must be found by then for this bank perceived as a weak link in the sector, otherwise it risks an even darker day until Wednesday, March 15.
At the close of trading, Credit Suisse was then worth barely 7 billion Swiss francs (about as many euros, or C$10.45 billion), a pittance for a bank that is part – just like UBS – of the 30 institutions worldwide deemed too big to fail.
But according to the Financial Times and Blick, the bank's customers withdrew 10 billion Swiss francs in deposits in a single day late last week. A tangible sign of distrust of the establishment.
Given the risks to the financial system, the eyes of the whole world are fixed on Zurich, where the negotiations are taking place.
“We are now awaiting a definitive and structural solution to the problems of this bank. »
— Bruno Le Maire, Minister of the Economy of France, in an interview with the daily newspaper LeParisian
According to Bloomberg, citing unnamed sources, UBS is demanding that the public authorities bear legal costs and potential losses .
Discussions stumble over investment banking, says the financial agency, one of the scenarios under study being a takeover solely of investment management. #x27;assets and wealth with an investment banking assignment.
Discussions also focus on the fate of the Swiss division of Credit Suisse, one of the profitable parts of the group, which lost 7.3 billion Swiss francs last year and which forecasts substantial losses in 2023.< /p>
This division brings together retail banking and loans to SMEs. One of the avenues considered by analysts is that of an IPO, which would also avoid massive layoffs in Switzerland due to duplication with UBS's activities.
On Wednesday, the distrust of investors and partners prompted the Swiss Central Bank to lend 50 billion Swiss francs to breathe new life into Credit Suisse and to reassure the markets. The respite, however, was short-lived.
Buying the bank would not be expensive today, but an acquisition of this size is dauntingly complex, especially when done in a hurry.
Credit Suisse has just experienced two years marked by several scandals which revealed, by management's own admission, substantial weaknesses in its internal control. The Swiss Financial Market Supervisory Authority (FINMA) accused him of having seriously failed in his prudential obligations in the bankruptcy of the financial company Greensill, which marked the beginning of his troubles.
By contrast, UBS, which spent several years recovering from the shock of the 2008 financial crisis, is beginning to reap the rewards of its efforts.
The Competition Commission may also raise eyebrows depending on the configuration of the takeover.
At the end of last October, Credit Suisse had unveiled a vast restructuring plan which provided for the elimination of 9,000 job positions. by 2025, more than 17% of its workforce.
The bank, which employed 52,000 people at the time, plans to separate the merchant bank from the rest of its activities to refocus on its most stable areas, including wealth management.
However, Morningstar analysts consider the restructuring too complex and not thorough enough.
< p class="e-p">Analysts at US bank J.P. Morgan are considering a drastic option: for Credit Suisse to completely shut down its investment banking business ment.