A decisive day to avoid a debacle. Switzerland’s largest bank UBS, pushed by the authorities, must absolutely finalize the takeover of its rival Credit Suisse this Sunday to avoid a wave of contagious panic in the markets on Monday.
UBS will buy Credit Suisse and the deal will be sealed on Sunday during an extraordinary meeting of the government and the leaders of the two banking giants in Bern, the generally well-informed tabloid Blick said on Saturday. 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.
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, the French finance minister, clarified the message in The Parisian : “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 8 on Monday and by then a solution will have to be found for the bank perceived as the weakest link in the sector.
A request for guarantees
According to the Bloomberg agency, UBS is asking public authorities to bear legal costs and potential losses that can amount to billions of Swiss francs. 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.
Also at the center of discussions is the fate to 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 still expects “substantial” losses in 2023. 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.
He pointed out Credit Suisse’s mismanagement
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.
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”. 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.