Last day for UBS to swallow Credit Suisse and avoid stock market panic on Monday

A merger of the two largest banks in the country, one of which is causing growing distrust among investors and a complex affair that could normally last for months. UBS will have had a few days.

Market pressure

But the Swiss authorities have no choice but to push UBS to overcome its reluctance, due to the enormous pressure exerted by Switzerland’s main economic and financial partners who fear for their financial centre, says Blick.

Bruno Le Maire, French finance minister, sent a clear message on Le Parisien: “We are now waiting for a definitive and structural solution to the problems of this bank”.

The US Treasury had also indicated that it was following the case closely.

The Swiss market opens at 08:00 GMT on Monday and by then a solution will need to be found for the bank perceived as the sector’s weak link.

Withdrawn 10 billion Swiss francs

At Wednesday’s stock market close after a record low, Credit Suisse was worth just 7 billion Swiss francs (about as many euros), a pittance for a bank that is part – like UBS – of the 30 establishments in the world that are considered too important to allow them to fail.

But according to the Financial Times and Blick, the bank’s customers withdrew 10 billion Swiss francs in deposits in a single day late last week. A tangible sign of distrust of the establishment.

According to the Bloomberg agency, UBS requires public authorities to bear the legal costs and potential losses that can amount to billions of francs.

Initial Public Offering ?

The discussions stumble over the investment bank, indicates the financial agency, one of the scenarios being studied is that of an acquisition only of assets and wealth management with the sale of the investment bank.

Discussions also concern what fate should be reserved for the Swiss branch of Credit Suisse, one of the profitable parts of the group which lost 7.3 billion Swiss francs last year and is still counting on “substantial” losses in 2023. and loans to SMEs. One of the avenues considered by analysts is that of an IPO, which would also avoid massive layoffs in Switzerland due to duplication with UBS’s activities.

On Wednesday, mistrust from investors and partners prompted the Swiss central bank to lend 50 billion Swiss francs to revitalize Credit Suisse and reassure markets. However, the respite was only short-lived.

What about the Competition Commission?

Credit Suisse has just experienced two years marked by numerous scandals which have revealed, by management’s own admission, “substantial weaknesses” in its “internal control”.

The Swiss financial market supervisory authority (Finma) accused him of having “seriously violated his prudential obligations” in the bankruptcy of the Greensill financial company which marked the beginning of his setbacks.

By contrast, UBS, which spent several years recovering from the shock of the 2008 financial crisis and a massive state bailout, is starting to reap the benefits of its efforts, and according to several media outlets, the bank had no plans to embark before the weekend in the Credit Suisse adventure.

The Competition Commission could also raise eyebrows depending on the configuration of the acquisition.

Faster, stronger

In late October, Credit Suisse unveiled a sweeping restructuring plan that called for the elimination of 9,000 jobs by 2025, or more than 17% of its workforce.

The bank, which employed 52,000 people at the end of October, plans to separate investment banking from the rest of its businesses to refocus on its more stable parts, including wealth management.