UBS UBS -5.50%
Group AG has offered to buy competitor Credit Suisse CS -6.94%
for about $1 billion in a deal engineered by Swiss regulators to restore confidence in the banking system, according to people familiar with the matter.
One option would be to buy Credit Suisse outright and then spin off the local Swiss operations into an independent entity, the people said. UBS would retain Credit Suisse’s valuable asset management business.
Discussions are ongoing and the outline of the deal could change as UBS and Swiss regulators release details of the plan and to what extent Swiss authorities will provide guarantees or backstops.
Officials are racing to finalize the deal before markets open in Asia, the people said. Regulators have offered to waive the requirement for customary shareholder votes to expedite the sale, one of the people said.
One issue in the discussions is what Swiss authorities would be allowed to generate through measures such as job cuts, a key factor in how much UBS can afford to pay for the deal, the people said.
UBS would only retain parts of Credit Suisse’s investment bank that fill gaps, either geographically or in certain product areas where UBS does not have a presence.
The price would be a substantial discount to Credit Suisse’s market value, which closed Friday at about $8 billion. UBS would take on large unknown costs and the complexity of integration. Some wealthy clients hold money in both banks and after a merger may decide to move some of their money to third parties for diversification purposes.
The size of UBS’ bid was previously reported by the Financial Times.
Credit Suisse’s so-called bail-in bonds are expected to be substantially written off, alleviating some of the debt that UBS would be taking on, some people familiar with the matter said.
More will follow as the news develops.
—Patricia Kowsmann contributed to this article.
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