UBS, the Swiss multinational investment bank, is reportedly in talks with the Swiss government to acquire its rival, Credit Suisse.
The move comes as Swiss authorities work to resolve the crisis of confidence in Credit Suisse, which has been embroiled in recent turmoil surrounding the collapses of US lenders Silicon Valley Bank and Signature Bank.
To move forward with the acquisition, UBS is requesting guarantees from the Swiss government to cover the cost of winding down parts of Credit Suisse and potential litigation charges. Additionally, the plan may involve spinning off Credit Suisse’s Swiss business.
However, negotiations are encountering significant obstacles, and concerns have arisen that the merger could lead to the loss of 10,000 jobs.
Reports suggest that the Swiss government is under pressure to broker a deal, with US authorities working with their Swiss counterparts to help facilitate it.
Furthermore, there are indications that other rival banks, such as Deutsche Bank, may also be interested in acquiring Credit Suisse.
Credit Suisse’s shares have already lost a quarter of their value in the last week, and the bank has been forced to tap $54 billion in central bank funding.
As one of the 30 global systemically important banks, the failure of Credit Suisse could have major implications for the entire financial system.
Credit Suisse, which has just over 50,000 employees and $1.4 trillion in assets under management at the end of 2022, is now facing a dire situation.
The acquisition by UBS, with the support of the Swiss government, could provide a lifeline for the beleaguered bank and help to restore confidence in the Swiss financial system.