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The possible end of Credit Suisse as an independent entity 167 years after its foundation is not entirely a surprise.
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UBS
Group could complete an acquisition of
Credit Switzerland
Group as of Saturday evening, according to the Financial Times, as regulators scramble to sanction a merger of Switzerland’s two largest banks against a backdrop of industry turmoil.
Both
Swiss National Bank
and regulator Finma now see the purchase of UBS (ticker: UBS) as the only option to tame the growing woes at Credit Suisse (CS), the FT reported Saturday, citing anonymous sources close to the negotiations.
Credit Suisse declined to comment on the report, while UBS did not respond from Baron request for comment.
Black rock
(BLK) was previously mentioned as another possible suitor, though it has since publicly denied being involved in a takeover.
The urgency for a deal comes as investors continue to pull money from Credit Suisse, which saw outflows of nearly $11 billion per day last week. The bank also saw more than $450 million in net outflows from its U.S. and European-managed funds from March 13 to 15, the Morningstar Direct said Friday, as private and institutional counterparties withdrew from funds managed by the embattled Swiss lender. .
The potential demise of Credit Suisse as a standalone entity 167 years after its founding is not entirely a surprise: the bank has dealt with a range of issues in recent years, from concerns over financial controls to government investigations, court setbacks, and several quarters of eye-watering losses, among other things, that left investors wondering if it will survive.
Still, the timeframe for a resolution has come under pressure in recent weeks, in the wake of high-profile bank failures in the US, most notably Silicon Valley Bank, whose assets are also on the market for a buyer.
The closure of SVB fueled global fears about the health of the sector, leading many clients to try to withdraw their money and, in particular, putting pressure on the shares of weaker banks amid major market swings. Credit Suisse shares are down more than 17% in the past five trading days and have lost more than a third of their value so far in 2023.
UBS was also hit by the sell-off in financial stocks, falling more than 7% over the past week, though it fell just 4% this year.
According to the FT’s sources, talks are now focused on concessions that UBS will seek if it goes ahead with a deal. The bank wants to be able to phase in all global capital regulations over time and protect against ongoing legal costs, which Credit Suisse has previously warned could cost it as much as $2 billion.
Write to Teresa Rivas at [email protected]
