UBS has made an offer to acquire Credit Suisse for up to $1 billion, the Financial Times reported. The planned deal between the two largest banks in Switzerland should already be signed on Sunday evening. However, the deal is reportedly set to be priced at a fraction of Credit Suisse’s closing price on Friday.
However, if the deal goes through, it would result in thousands of job cuts, according to a Reuters report.
Credit Suisse is facing a crisis of confidence following the recent collapse of Silicon Valley Bank and Signature Bank. As one of the world’s major banks caught up in the turmoil, Credit Suisse was under pressure from regulators and authorities to find a solution quickly.
UBS’s proposed takeover bid is expected to result in significant changes for both banks. The Swiss government is reportedly planning to change the country’s laws to bypass a shareholder vote on the transaction, which would speed up the process of completing the acquisition.
UBS on Sunday morning made an offer to buy Credit Suisse for 0.25 Swiss francs ($0.27) per share, to be paid in UBS shares. That’s a fraction of Credit Suisse’s closing price of 1.86 Swiss francs on Friday. However, the offer also includes a stipulation of a “material adverse change” that would render the deal null and void if Credit Suisse credit spreads increase by 100 basis points or more.
The 167-year-old bank Credit Suisse is one of the largest wealth managers in the world. As some banks grapple with the fallout from rapidly rising central bank interest rates, authorities are trying to bail out the bank to prevent a collapse in investor confidence.
As one of 30 global banks considered systemically important, any transaction for Credit Suisse could have a significant impact on bank valuations. However, Credit Suisse is reportedly opposing the offer of up to $1 billion, according to sources with knowledge of the matter cited by Bloomberg News. The bank believes that the proposed offer is too low and that it would have an adverse impact on shareholders and employees holding deferred shares.
Both Credit Suisse and UBS declined to comment on the matter, and the Swiss government has not yet responded to requests for comment.
According to a Reuters report, a source familiar with the matter had previously stated that UBS is seeking $6 billion from the Swiss government in connection with the proposed takeover of Credit Suisse. The guarantees sought from UBS would cover the costs of winding up certain parts of Credit Suisse and potential litigation costs.
While the talks are still ongoing, a source had warned that the talks are facing significant roadblocks and that up to 10,000 jobs may have to be cut if the two banks merge. The Swiss Association of Bank Employees has therefore called for the formation of a task force to combat the employment risk.
The negotiations, which took place over the weekend, came amid a turbulent week for bank stocks and efforts in Europe and the United States to support the sector following the collapse of Silicon Valley Bank and Signature Bank.
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