A decisive day to avoid a debacle. Switzerland’s largest bank, UBS, must absolutely complete the takeover of its rival Credit Suisse this Sunday under pressure from the authorities to avoid a wave of contagious panic in the markets on Monday.
UBS is buying Credit Suisse and the deal will be sealed on Sunday at an extraordinary meeting of the government and leaders of the two banking giants in Bern, the usually well-informed tabloid Blick said on Saturday. A merger of the country’s two largest banks, one of which arouses growing investor mistrust and a complex affair that can normally take months. UBS has had a few days.
All round pressure
But Swiss authorities have no choice but to push UBS to overcome its reluctance, because of enormous pressure from Switzerland’s main economic and financial partners who fear for their own financial centre, says Blick.
Bruno Le Maire, the French finance minister, made the message clear The Parisian : “We are now waiting for a definitive and structural solution to the problems of this bank”. The US Treasury Department has also indicated that it is closely following the case. The Swiss market opens at 8 a.m. on Monday, and by then a solution must be found for the bank, which is seen as a weak link in the industry.
A request for guarantees
According to the Bloomberg agency, UBS requires the government to bear legal costs and potential losses that could run into billions of Swiss francs. The discussions hit the investment bank, the financial bureau indicates, one of the scenarios examined is a takeover of only wealth and asset management with a sale of the investment bank.
The discussions also focus on the fate to be reserved for the Swiss branch of Credit Suisse, one of the group’s profitable parts that lost 7.3 billion Swiss francs last year and still expects “significant” losses in 2023. brings retail banking and loans to SMEs. One of the options being considered by analysts is that of an IPO, which would also prevent mass layoffs in Switzerland due to overlapping with UBS’s activities.
Bad management from Credit Suisse pointed out
On Wednesday, mistrust from investors and partners prompted the Swiss central bank to borrow 50 billion Swiss francs to revive Credit Suisse and reassure the markets. The peace, however, was short-lived.
Credit Suisse has just gone through two years marked by several scandals that, according to management, revealed “substantial weaknesses” in its “internal control”. By contrast, UBS, which spent several years recovering from the shock of the 2008 financial crisis and a massive state bailout, is beginning to reap the rewards of its efforts, and according to several media outlets, the bank was not planning to weekend to get started. on the adventure of Credit Suisse.