Thousands of jobs are at stake in the city as regulators scramble to bail out one of the world’s largest banks before markets open Monday morning.
Officials and bankers are scrambling to secure a merciless takeover of Credit Suisse, a Swiss lender with assets in excess of £470bn, after a disastrous week that saw shares plunge by nearly a fifth and speculation about its future mount .
Swiss authorities are trying to push through a takeover of the bank by rival UBS after concluding that this is the only option that can guarantee long-term stability. A deal could be closed as early as Saturday night, with the boards of directors of both banks meeting over the weekend.
It is feared that the lack of a deal before Monday morning will lead to a further plunge in equities, which would have dire consequences in markets around the world.
An earlier attempt to restore market confidence by injecting $54bn (£44bn) into Credit Suisse with an emergency loan from the Swiss central bank failed to calm nerves on Wednesday, with shares falling in the following days.
The talks are being closely monitored by the Bank of England, which is not the lead regulator for either bank, but is watching for possible repercussions in the UK.
Credit Suisse and UBS together employ around 10,000 people in London, with headquarters in Canary Wharf and Broadgate in the City respectively. Banking insiders expect one of the largest redundancies since the 2008 crisis if the takeover goes ahead.
A takeover would create one of the largest banks in the world, with a £1.3 trillion balance sheet, more than twice the size of the Swiss economy – raising the question of whether it would be too big to bail out if the turmoil does not decrease.
Parts of the bank are likely to be auctioned off by UBS in the coming weeks, with rival Deutsche Bank expressing interest in some of its business.
The American investment firm Blackrock also considered a bid for Credit Suisse before ruling out a bid, according to the Financial Times.