UBS agrees to buy Credit Suisse for $2b - FT

At least two major banks in Europe are examining scenarios of contagion

A logo of Swiss giant bank UBS in front of a logo of Credit Suisse bank in Zurich. The heads of Switzerland's two biggest banks were set for further talks on Sunday, in which UBS could salvage Credit Suisse, which required a $53.7 billion rescue last week over growing doubts about its solvency. - AFP

By Reuters

Published: Sun 19 Mar 2023, 9:40 PM

UBS has agreed to buy Credit Suisse after increasing its offer to more than $2 billion, the Financial Times reported on Sunday.

UBS will pay more than 0.50 francs ($0.5401) a share in its own stock, far below Credit Suisse’s closing price of 1.86 francs on Friday, FT reported, citing sources.

The Swiss National Bank has agreed to offer a $100 billion liquidity line to Credit Suisse as part of the deal, the FT added, citing two people familiar with the matter.

According to the report, UBS has agreed to a softening of a material adverse change clause that would void the deal if its credit default spreads jump. Credit Suisse and UBS declined to comment.

Officials have been racing to rescue the 167-year-old bank, among the world’s largest wealth managers, after a brutal week that saw the second- and third-largest US bank failures in history. As one of 30 global banks seen as systemically important, any deal for Credit Suisse could ripple through global financial markets.

At least two major banks in Europe are examining scenarios of contagion possibly spreading in the region’s banking sector and looking to the Federal Reserve and the European Central Bank to step in with stronger signals of support, two senior executives told Reuters.

A person with knowledge of the talks earlier told Reuters that UBS sought $6 billion from the Swiss government as part of a possible purchase of its rival. The guarantees would cover the cost of winding down parts of Credit Suisse and potential litigation charges.

One source previously said the talks were encountering significant obstacles, and 10,000 jobs may have to be cut if the two banks combined. The Swiss Bank Employees Association on Sunday called for the immediate creation of a task force to deal with the risk to jobs.

Swiss broadcaster SRF and other media reported that the government would hold an “important” press conference later. Credit Suisse shares lost a quarter of their value last week. The bank was forced to tap $54 billion in central bank funding.