UBS is in talks to acquire Credit Suisse
Switzerland's biggest bank UBS is in talks to buy the country's second-largest bank, Credit Suisse, which has found itself in trouble, the Financial Times (FT) reported, citing several unnamed sources.
According to the newspaper's sources, the talks were organized by the Swiss National Bank (SNB) and Swiss financial regulator FINMA in an attempt to boost confidence in the confederation's banking sector. It states that both full and partial acquisitions are being discussed.
The newspaper recalls that on Thursday the SNB was forced to grant Credit Suisse a loan of up to 50 billion francs (approximately .7 billion). According to the newspaper, however, this did not prevent the credit institution's shares from falling, as major investors refused to provide additional capital to the bank, and the withdrawal of funds from wealthy customers continued. As a result, according to the article, by the end of trading yesterday, Credit Suisse's capitalization had fallen to billion, compared to .6 billion for UBS.
A source told the FT that the Swiss regulator had informed Washington and London that a merger of the two banks was the main plan to avoid a complete collapse of credit for Credit Suisse. Also, the newspaper notes, UBS is analyzing the possible risks of such a merger.
The paper's sources said the talks would take place over the weekend to try to find a solution before markets opened on Monday. However, they acknowledged that there is no guarantee that a deal will eventually be reached.
On Tuesday, Credit Suisse published a report acknowledging the weakness of internal controls. In addition, in an interview with Bloomberg, the bank's CEO, Ulrich Koerner, said that there is a continuing outflow of customers. Financial analysts drew attention to the statement of the Saudi National Bank, whose share in Credit Suisse is the largest and reaches 9.8%, about its absolute unwillingness to provide additional support to the Swiss bank by increasing its participation in its capital.
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