UBS is considering a possible takeover of troubled Credit Suisse on Saturday, sources said, a move that could ease fears that the ongoing crisis could destabilize the global banking system.
Swiss creditFoto: Juergen Hasenkopf / Alamy / Profimedia Images
Credit Suisse, with a history of 167 years, is the most famous bank involved in the market turmoil triggered by the collapse of the American banks Silicon Valley Bank and Signature Bank, in the last week, losing a quarter of its stock market value since Monday.
To contain the crisis, UBS has been under pressure from Swiss authorities to take over rival bank Credit Suisse, two people familiar with the matter said.
The plan could see the Swiss government provide a guarantee against the risks involved, while Credit Suisse’s Swiss division could be spun off.
UBS, Credit Suisse and Switzerland’s financial regulator FINMA declined to comment.
Credit Suisse CFO Dixit Joshi and his teams met over the weekend to assess their options for the bank, people with knowledge of the matter said, and there were more reports of interest from rivals.
US financial giant BlackRock said it had no plans or interest in making a rival bid for Credit Suisse, while Bloomberg reported that Deutsche Bank was looking into buying some of the bank’s assets.
Credit Suisse’s share price has fluctuated widely this week as the bank was forced to seek $54 billion in emergency funding from the Swiss central bank.
The mood in Switzerland, long considered a model for banking stability, was subdued as executives grappled with the future of the country’s biggest banks.
“Banks under permanent stress”, says the front page headline of the Neue Zuercher Zeitung on Saturday.
Credit Suisse is among the world’s largest wealth managers and is considered one of the 30 systemically important banks worldwide, whose failure would cause turbulence throughout the financial system.
In a sign of vulnerability, at least four of Credit Suisse’s main rivals, including Societe Generale and Deutsche Bank, have imposed restrictions on their transactions involving the Swiss bank or its securities, five people with direct knowledge of the matter said.
Goldman Sachs cut its recommendation on exposure to European bank debt, saying the lack of clarity over the future of Credit Suisse would put pressure on the wider sector in the region.
Sector fundamentals are stronger and global systemic linkages weaker than at the time of the global financial crisis, Goldman analyst Lotfi Karoui wrote in a note to clients. This tendency greatly limited the risk of a potential vicious circle of counterparty credit losses, Karoui mentioned.
“However, a stronger political response is probably needed to bring some stability,” Karoui said. (source: news.ro)