The main Swiss bank, UBS, under pressure from the authorities, is willing to buy its rival, Credit Suissebut at a fraction of its value, at a time when an operation is urgently needed to avoid a contagious wave of panic in the markets on Monday.
Credit Suisse is one of the 30 largest banks in the world and its spectacular stock market crash this week will end nervousness in the financial world, sensitized after the collapse of entities in the United States.
According to the Financial Times newspaper, which was the first outlet to report a possible purchase of Credit Suisse by UBS, the latter would be willing to pay only 1,000 million dollars (930 million euros), a fraction of the stock market valuation that the bank had at the close of the markets on Friday.
This other transaction is being analyzed since morning by the federal government in the Swiss capital Bern, after emergency meetings on Thursday and Saturday.
According to the tabloid Blick, Credit Suisse’s fate will be sealed in an extraordinary meeting between the government and the managers of the two entities in Bern. Such a merger is a complex affair that would normally take months to complete, but under pressure from the authorities, UBS will have to close the deal within a few days.
The Swiss authorities considering that there is no choice but to push UBS to overcome reluctance, under pressure from Switzerland’s main economic and financial partners, who fear for the stability of their own financial markets, according to Blick.
Consolidated Swiss banking rules that UBS should consult its shareholders for a period of six weeks, but for this operation emergency measures could applyaccording to the Financial Times business daily, citing sources who asked to remain anonymous.
The Swiss market opens Monday at 0800 GMT and a solution is expected to be found by then as Credit Suisse is perceived as a weak link in the system.
The bank appeared on Wednesday a record fall and its stock market value it plummeted to 7 billion Swiss francs, or about 7.58 billion dollars, which is an almost paltry sum for an entity considered to be systemically important.so its bankruptcy must be avoided.
According to the Financial Times and Blick, the bank’s clients withdrew 10 billion Swiss francs in deposits in one day at the end of last week, a tangible indication of distrust of the institution. These negotiations take place after a black week on the stock market in which the Swiss central bank had to intervene and lent Credit Suisse $53.7 billion to give it a breath of fresh air and I tried to appease the nervousness of the investors, without success.
According to the Bloomberg agency, UBS requires public authorities to pay legal costs and potential losses that can run into the billions of Swiss francs.
The negotiation was central on Saturday around the activities of the investment bank, according to the financial agency, and one of the hypotheses to get out of the crisis is that the purchase is partial and leaves this division out.
At the end of October, Credit Suisse filed a huge restructuring plan that contemplated the abolition of 9,000 jobs until 2025, which represents 17% of its workforce.
The entity, with a workforce of 52,000 people at the end of October, he wanted to miss out on more stable activities and radically transform his business banking. For its part, the Swiss bank employees’ union «demanded» on Sunday that its delegates participate in the negotiation, taking into account the «enormous» consequences of the operation on the workforce.
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