A Credit Suisse bank in Geneva, March 15, 2023 (AFP / Fabrice COFFRINI)
Switzerland’s largest bank, UBS, is being pressured by authorities to buy rival Credit Suisse to avoid a debacle, several media outlets said on Saturday, seeking to reassure investors and avoid contagious panic in the markets on Monday. prevent.
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 generally well-informed Blick reported on Saturday.
– Busy –
He emphasizes that the authorities have no other choice, due to the enormous pressure exerted by Switzerland’s main economic and financial partners, who fear for their own financial centre.
Bruno Le Maire, the French finance minister, made the message clear in Le Parisien: “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 08:00 GMT on Monday. By then, everything must be arranged for the bank, which is seen as a weak link in the sector.
After a record fall, Credit Suisse was worth barely 7 billion Swiss francs (about the same amount of euros) at the close of business on Wednesday, a misery for a bank that – like UBS – is one of 30 branches around the world that are considered too important considered to fail.
But according to the Financial Times and Blick, the bank’s customers withdrew 10 billion Swiss francs in deposits in one day late last week. A tangible sign of distrust of the establishment.
– Public guarantees –
So how to reassure? According to the Bloomberg agency, citing anonymous sources, UBS is demanding that the government bear legal costs and potential losses that could run into billions of francs.
The discussions hit the investment bank, the financial bureau indicates, one of the scenarios examined is a takeover of only wealth and wealth management with a sale of the investment bank.
Discussions also focus on the fate of Credit Suisse’s Swiss branch, one of the group’s profitable parts that lost CHF 7.3 billion last year and still expects “significant” losses in 2023.
This branch brings together retail banking and lending 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.
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.
Buying the bank wouldn’t be expensive today, but an acquisition of this magnitude is extremely complex, especially if it’s done in a hurry.
– What about the Competition Commission? –
Credit Suisse has just gone through two years marked by several scandals that, according to management, revealed “substantial weaknesses” in its “internal control”.
The federal financial market regulator (FINMA) accused him of “seriously breaching his prudential obligations” in the bankruptcy of the financial company Greensill, which marked the beginning of his setbacks.
The logo of Swiss bank UBS on the Opera Tower in Frankfurt, Germany, on February 7, 2023 (AFP/Daniel ROLAND)
In contrast, UBS, which spent years recovering from the shock of the 2008 financial crisis, is beginning to reap the rewards of its efforts, and according to various media outlets, the bank was not planning to embark on the Credit Suisse adventure. .
Depending on the configuration of the takeover, the Competition Commission could also raise its eyebrows.
– Faster, stronger –
At the end of October, Credit Suisse had unveiled a comprehensive restructuring plan that envisages the elimination of 9,000 jobs by 2025, or more than 17% of the workforce.
The bank, which employed 52,000 people at the end of October, plans to separate investment banking from the rest of its business to refocus on the most stable parts, including wealth management.
But as Blick points out, “Everything points to a Swiss solution this Sunday. And when the stock market opens on Monday, Credit Suisse could be a thing of the past.”