According to the Financial Times, the largest Swiss bank UBS has offered $1 billion to buy the second largest Swiss bank, Credit Suisse, which has found itself in liquidity problems. The Swiss government is supposed to enable a quick takeover by changing the legislation.
Credit Suisse is one of 30 banks in the world that are considered “too big to fail” because they are very important to the international banking system. The Swiss government already held an extraordinary session on Saturday evening, but did not make an official statement on the progress of the negotiations.
According to the Financial Times, the largest Swiss bank UBS is now expected to offer up to one billion euros to take over its competitor. According to sources cited by the Reuters agency, UBS is also expected to ask the Swiss government to cover approximately $6 billion in costs in the event of the purchase of Credit Suisse.
Last year, Credit Suisse had a loss of 7.3 billion Swiss francs, while UBS had a profit of 7 billion, Špela Novak reported for Radio Slovenia. If there is no resolution by Monday, when markets resume trading, Credit Suisse shares will continue to fall, according to the British BBC.
The Swiss government is now said to be rushing to change the legislation to allow the takeover before Monday, in order to ensure the stability of the Swiss and global banking system. According to the current legislation, UBS shareholders would otherwise have six weeks to define before the takeover.
Planned layoffs at Credit Suisse
The Financial Times also writes that the number of jobs in the Credit Suisse bank would be reduced by about 10,000 after the takeover, which is said to be one of the biggest obstacles before the deal is signed. The Swiss Bankers’ Association called for the immediate establishment of a working group in which employees would also be included. As he points out, employees should not have to pay for management’s mistakes.
Credit Suisse’s liquidity problems
Credit Suisse, Switzerland’s second largest bank, which has been rocked by a number of scandals in recent years, including allegations of money laundering, came under pressure last week as the collapse of two regional US banks, SVB and Signature, rocked markets and the bank in warned about the weakness of internal controls in the annual report.
Its shares have fallen sharply in recent days, and the bank’s majority owner, the Saudi National Bank, has rejected further financial injections into the bank. The Swiss central bank loaned Credit Suisse 50 billion francs ($50.3 billion), but even that did not materialize.