forced marriage negotiations between UBS and Credit Suisse

The headquarters of the Credit Suisse bank in Zurich, Saturday 18 March.

Crisis weekend at the height of Swiss political power and in the executive rooms of the two Swiss banking giants, which are among the thirty banking institutions “systemic”, considered essential for the good health of the international financial system. According to the information of Financial Times, Intense talks are underway on Saturday, March 18, for UBS to take over all or part of its rival Credit Suisse.

The latter is on the verge of leaving the road after a grueling week that saw it first record the biggest drop in its share price (-24.24% on Wednesday, March 15, reaching an all-time low), before a bailout of 50 billion Swiss francs from the Swiss National Bank (SNB), i.e. the equivalent in euros, in the form of a credit line to deal with a liquidity crisis, is only partially producing its effects. Barely calmed down in the hours following the announcement of this breath of fresh air, the markets have in fact resumed their downward spiral, proposing once again the hypothesis of a generalized contagion to the entire European banking sector next week.

It is under the specter of what would be perceived abroad as a real disaster for the Swiss financial center, long lauded for its impeccable stability, that the boards of directors of the two largest Swiss banks are meeting separately this week. what would become the largest bank merger in Europe since the 2008 financial crisis.

The search for a “legible” agreement.

The Swiss National Bank (SNB) and the FINMA, the Swiss financial markets authority, are leading the negotiations, while for its part the Federal Council (government) in Bern is also in crisis session on the matter. None of the parties involved communicate, with the intention of avoiding any misunderstanding of the ongoing discussions. The aim appears to be to get a deal breaker before the markets reopen on Monday.

“We urgently need a simple and straightforward solution “, says Reto Schiltknecht of the Zurich consultancy Geissbühler Weber & Partner, quoted by the Neue Zürcher Zeitung. For a long time a senior official of the FINMA, he was in particular the person in charge of the file “too big to fail” – these financial institutions that the State cannot abandon to their fate, due to their size and their roots in the financial system and in the national economy. Participated in the implementation of a bailout plan for large banks.

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