Credit Suisse, UBS and their key regulators are working out a deal on the merger of Switzerland’s two biggest banks, the Financial Times reported Saturday.
The deal could come together Sunday, the Wall Street Journal reported Saturday.
Regulators have offered to waive a requirement for customary shareholder votes to expedite the sale, one of the people said. The discussions were fast-moving and a remaining sticking point was the status of who will own Credit Suisse’s substantial Swiss retail arm, the reports said.
The Swiss National Bank and regulator Finma have told international counterparts that they regard a deal with UBS as the only option to stop a collapse in confidence in Credit Suisse CSGN, -8.01% CS, -6.94%. Deposit outflows from the bank topped Sfr10bn ($10.8bn) a day late last week as fears for its health mounted, according to the report.
Boards at the two banks are meeting this weekend. Credit Suisse’s key regulators in the US, the UK and Switzerland are considering the legal structure of a deal and several concessions that UBS UBSG, -1.16% UBS, -5.50% has sought.
UBS wants to be allowed to phase in any demands it would face under global rules on capital for the world’s biggest banks. Additionally, UBS has requested some form of indemnity or government agreement to cover future legal costs, one of the people said.
UBS, Credit Suisse, the SNB and the Federal Reserve declined to comment. Finma and the Bank of England did not immediately respond to requests for comment.
The possibility of a deal comes days after the Swiss central bank was forced to provide an emergency SFr50bn ($54bn) credit line to Credit Suisse.
See: Credit Suisse shares jump as Swiss banking giant says it will borrow from SNB and buy back debt
This failed to arrest a slide in its share price, which has fallen to record lows after its largest investor ruled out providing any more capital and its chair admitted that an exodus of wealth management clients had continued.
American depositary receipts of Credit Suisse CS, -6.94% jumped more than 7% in the extended session Friday, after ending the regular trading day down 7%. The ADRs are down 24% in the week, contrasting with a weekly gain of 1.4% for the S&P 500 index. SPX, -1.10% Shares trading in Zurich had their worst week since the 2008 financial crisis.
The prospective takeover reflects the sharp divergence in the two banks’ fortunes.
Over the past three years, UBS shares have gained about 120 per cent while those of its smaller rival have plunged roughly 70 per cent. UBS has a market capitalisation of $56.6bn, while Credit Suisse closed trading on Friday with a value of $8bn. In 2022, UBS generated $7.6bn of profit, whereas Credit Suisse made a $7.9bn loss, effectively wiping out the entire previous decade’s earnings.
Earlier Bloomberg News reported that Deutsche Bank AG DBK, -1.53% was monitoring the situation at Credit Suisse for a potential opening to acquire certain businesses.
US investment giant BlackRock BLK, -0.04% had drawn up a rival approach, evaluated a number of options and talked to other potential investors, the Financial Times also reported. However, BlackRock denied that it’s working on a possible rival bid for Credit Suisse Group AG, according to Bloomberg News.
A full merger between UBS and Credit Suisse would create one of the biggest global systemically important financial institutions in Europe. UBS has $1.1tn total assets on its balance sheet and Credit Suisse has $575bn.