Expectation in Switzerland before rumors of the purchase of Credit Suisse by its rival UBS

Expectation in Switzerland before rumors of the purchase of Credit Suisse by its rival UBS
  • The Reuters Agency affirms that UBS asks for a 6,000 million dollar guarantee from the Swiss government and plans to lay off 10,000 employees

Swiss and international financial circles await with high expectation the possible purchase of Credit Suisse, after a week of heart attack on the stock market, by its main Swiss rival, the UBS bank, an operation that some analysts believe could take place this weekend, in order to avoid a new collapse in the first trading session on Monday. The bank requests guarantees of 6,000 million dollars from the Swiss government and plans to lay off 10,000 workers, according to the Reuters Agency.

Rumors of the purchase of Credit Suisse (Switzerland’s second largest bank by market volume) by UBS (first), first published by the daily Financial Timesincreased today with information from the agency Bloomberg which ensure that the potential acquiring entity has asked the Swiss Government for guarantees that a partial or complete acquisition of its rival it will not cause you legal problems the losses.

Said guarantees would be of about 6 billion dollars, according to the Reuters Agency, citing two sources of this negotiation, which indicate that these guarantees face “possible litigation.” These same sources affirmed that, if the merger occurs, 10,000 jobs will have to be eliminated.

This information shuffles the possibility that UBS, whose headquarters is next door to Credit Suisse’s in Zürich (both are in the central Paradenplatz square), assumes the activities of wealth and asset management of its rival, while it would sell off the banking business.

Only solution

The Swiss economic agency AWP affirmed that both the Swiss National Bank (SNB) and the regulatory commission of the stock market (Finma) admit that the purchase of Credit Suisse by UBS is the only solution to avoid the collapse of the bank of the two candles .

Wrapped in serious financial and image problems, the bank Credit Suisse suffered a 24% drop on the Zurich stock market last Wednesday, after its main shareholder since 2022, the Saudi National Bank, assured that it was not going to invest more in the Swiss entity to clean up its battered accounts.

To calm the market, the Swiss National Bank announced hours after that stock market crash a loan of 50,000 million francs (50,500 million euros) to Credit Suisse, allowing the entity to recover 19% on the Zurich Stock Exchange on Thursday, but on Friday shareholder doubts returned and shares fell again 8%.

Faced with all the rumours, a former head of Finma quoted today by the Swiss television RTS has assured that a UBS-Credit Suisse merger is not possible in accordance with national competition regulations, given the dominant position of both in the Swiss banking sector.

Interestingly, in the past UBS had to be bailed out by the Swiss authorities due to its exposure to subprime mortgages causing the financial crisis of 2008, something that, however, did not happen to its rival Credit Suisse.

Rumors of the purchase of Credit Suisse by the US investment fund also emerged throughout the day. BlackRockwhich owns 4% of the Swiss bank’s shares, but the fund has denied such a possibility.

continuing losses

Credit Suisse, founded in 1856, chains two years of millionaire losses: in 2021 they were 1,572 million Swiss francs (1,600 million euros, 1,690 million dollars), and in 2022 they almost quintupled, to 7,293 million francs (7,400 million euros, 7,800 million dollars).

Among the main factors that explain these lousy accounts and the distrust of investors, its Exposure to venture firms that collapsed in prior yearssuch as the American hedge fund archegos or the Anglo-Australian financial services firm Greensill.

Added to the financial problems are many others around the bank reputationwith several resignations of its directors immersed in different scandals, which have caused an extensive remodeling of the board of directors in recent years.

Related news

The main strategy that Credit Suisse has launched to try to put an end to its crisis is the ambitious restructuring plan started in October last year.

This plan included the dismissal of 9,000 workers worldwide, a 15% cut in its expenses and a capital increase of 4,000 million francs (4,050 million euros) that marked the entry of the Saudi National Bank as the main shareholder.


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