A customer walks towards an automatic teller machine (ATM) inside a Credit Suisse Group AG bank branch in Geneva, Switzerland, on Thursday, Sept. 1, 2022.
Jose Cendon | Bloomberg | Getty Images
Swiss banking giant UBS on Sunday offered to purchase its embattled rival Credit Suisse for as much as $1 billion, in accordance with the Financial Times, citing 4 individuals with direct knowledge of the situation.
The deal, which the FT said might be signed as early as Sunday evening, values Credit Suisse at around $7 billion lower than its market value at Friday’s close.
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The FT said UBS had offered a price of 0.25 Swiss francs ($0.27) a share to be paid in UBS stock. Credit Suisse shares ended Friday at 1.86 Swiss francs. The fast-moving nature of the negotiations means the terms of any end deal might be different from those reported.
Credit Suisse is reportedly balking on the offer, nonetheless, arguing it is just too low and would hurt shareholders and employees, individuals with knowledge of the matter told Bloomberg.
Credit Suisse and UBS declined to comment on the reports when contacted by CNBC.
Swiss authorities are also reportedly considering full or partial nationalization of the bank as an alternative choice to the ustakeover, in accordance with a Sunday Bloomberg report.
The usdeal is being orchestrated quickly, so the Swiss are preparing for the case that it falls through, Bloomberg said, citing individuals with knowledge of the matter. The country is reportedly considering whether it could take over the bank completely or hold a big equity stake.
The usoffer comes after Credit Suisse shares logged their worst weekly decline because the onset of the coronavirus pandemic, despite an announcement that it could access a loan of as much as 50 billion Swiss francs ($54 billion) from the Swiss central bank.
It had already been battling a string of losses and scandals, and last week sentiment was rocked again with the collapse of Silicon Valley Bank and the shuttering of Signature Bank within the U.S., sending shares sliding.
Credit Suisse’s scale and potential impact on the worldwide economy is way greater than the U.S. banks. The Swiss bank’s balance sheet is around twice the dimensions of Lehman Brothers when it collapsed, at around 530 billion Swiss francs as of end-2022. It’s also way more globally inter-connected, with multiple international subsidiaries — making an orderly management of Credit Suisse’s situation much more vital.
Credit Suisse lost around 38% of its deposits within the fourth quarter of 2022, and revealed in its delayed annual report early last week that outflows have still yet to reverse. It reported a full-year net lack of 7.3 billion Swiss francs for 2022 and expects an additional “substantial” loss in 2023.
The bank had previously announced an enormous strategic overhaul in a bid to deal with these chronic issues, with current CEO and Credit Suisse veteran Ulrich Koerner taking up in July.
This can be a developing story. Please check back for updates.
