UBS is in talks to take over all or part of Credit Suisse, with the boards of the two biggest Swiss lenders due to meet separately this weekend to consider Europe’s most important banking combination since the financial crisis, according to several people briefed on the talks.
The Swiss National Bank and regulator Finma are orchestrating the talks in a bid to boost confidence in the country’s banking sector, the sources said. Their intervention comes days after the central bank was forced to provide an emergency credit line of 50 billion Swiss francs ($54 billion) to Credit Suisse.
However, that failed to halt a plunge in its share price, which fell to record lows after its biggest investor ruled out providing more capital and its chairman admitted an exodus of customers wealth management had continued.
UBS has a market value of $56.6 billion, while shares of Credit Suisse closed Friday with a market value of $8 billion.
Swiss regulators told their US and UK counterparts on Friday night that merging the two banks was their “plan A” to stop the collapse of confidence in Credit Suisse, a person familiar with the talks told the FT.
A number of different options are being discussed between the two banks, another person told the FT, who added that the two sides are trying to assess regulatory constraints in different jurisdictions. This person added that UBS is also analyzing the potential risks a deal could have for its own business.
The central bank’s aim is to agree a simple and straightforward solution before markets open on Monday, one of the people said. There is no guarantee that an agreement will be reached.
Credit Suisse declined to comment. UBS declined to comment, as did the Bank of England and the Federal Reserve. The Swiss National Bank did not respond to requests for comment.
This is a developing story. More soon . . .