UBS has offered to buy Credit Suisse for up to $1 billion as Swiss officials race to bail out the troubled lender.
The all-stock deal could be signed as early as Sunday, the Financial Times reported, though Credit Suisse was reportedly unhappy with the heavily discounted offer.
The Swiss government is said to be planning to change the country’s laws to bypass a shareholder vote on the transaction in an effort to speed up the transaction. Officials are scrambling to secure a deal before markets open Monday, fearing another sharp drop in Credit Suisse’s share price.
Swiss officials have turned to UBS to broker a bailout deal that would keep the bank under national control.
However, UBS is hesitant to take on the troubled lender without full knowledge of its business.
Credit Suisse is also said to be dissatisfied with its rival’s takeover bid, Bloomberg reports.
UBS is offering 0.25 Swiss francs ($0.27) per Credit Suisse share, well below Friday’s closing price of 1.86 Swiss francs and virtually wiping out the bank’s existing shareholders.
Credit Suisse and UBS declined to comment and the Swiss government did not immediately respond to a request for comment.
The authorities are doing everything they can to save the 167-year-old bank, which is one of the largest asset managers in the world.
Credit Suisse shares lost a quarter of their value last week and the bank was forced to ask the Swiss National Bank for a backstop of up to £44bn.
Despite the central bank agreeing, Credit Suisse continued to suffer from continued withdrawals and signs of financial stress late last week as banks and customers scrambled to cut ties.
The front page of the Swiss newspaper NZZ am Sonntag carried the headline “The Last Days of Credit Suisse” above an image of the bank’s headquarters that went up in flames on Sunday.
As one of the 30 globally systemically important banks, Credit Suisse’s failure would ripple through the entire financial system.
US authorities are working with their Swiss counterparts to help close a deal, Bloomberg reported.
Sky News said the Bank of England has indicated its support for the proposed takeover of Credit Suisse.
UBS has asked the Swiss government for $6 billion to cover possible losses on the deal, according to Reuters. The guarantees would cover the costs of winding up parts of Credit Suisse and possible litigation costs.
The bank also wants to insert a clause that would allow UBS to pull out if UBS’s credit default swaps exceed a certain level, which would indicate that investors are nervous about UBS’s financial situation.
The frantic weekend negotiations over Credit Suisse’s future follow a brutal week for bank stocks following the collapse of US lenders Silicon Valley Bank and Signature Bank.