UBS’ potential takeover of Credit Suisse: What you need to know

Switzerland-based Credit Suisse has been thrown into turmoil by the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week.

Multinational investment bank UBS is said to have asked the Swiss government to cover about $6 billion in costs if it wanted to buy a competitor Credit Suisse.

Authorities are struggling to resolve the crisis of confidence in the 167-year-old Swiss-based organization, the world’s most important bank caught in the chaos caused by the collapse of US lenders Silicon Valley Bank and Signature Bank over the past weeks.

Here’s what you need to know about the potential acquisition:

What is the latest on negotiations?

• The guarantees requested by UBS will cover the cost of liquidating parts of Credit Suisse and possible litigation fees.
• Reportedly, UPS, which is based in Switzerland, has come under pressure from the Swiss authorities to get its local rival to control the crisis. The plan could lead to the breakup of Credit Suisse’s Swiss business.
• One source warned, according to Reuters news agency, that the talks face major hurdles, and 10,000 jobs may have to be cut if the two banks merge.

• The Financial Times reports that Switzerland is preparing to use emergency measures to speed up the deal.
• Bloomberg News reports that US authorities are working with their Swiss counterparts to help broker a deal.
• According to the Swiss newspaper Blick, UBS will buy Credit Suisse in a deal that will be concluded on Sunday during an extraordinary meeting in Bern, which brings together the Swiss government and bank executives.
• There have been multiple reports of interest in Credit Suisse from other competitors as well. Bloomberg reported that Deutsche Bank was considering buying some of its assets.

Why is Credit Suisse going through a crisis?

• Credit Suisse shares have lost a quarter of their value in the past week.
• The bank was forced to click 54 billion dollars in the Central Bank Finance as it tries to recover from a series of scandals that have undermined investor and customer confidence.
• Credit Suisse has been plagued by a series of scandals in recent years. The shares were valued at 12.78 Swiss francs ($13.84) in February 2021.
• In 2022, the bank posted a net loss of $7.9 billion and expects a “significant” pre-tax loss this year.

What is the importance of Credit Suisse?

• Credit Suisse ranks among the world’s largest wealth managers and, crucially, is one of 30 systemically important global banks whose failure would cause ripples through the entire financial system.
• Credit Suisse has local wealth management, investment banking, a local Swiss bank, and asset management operations.
• It had just over 50,000 employees and 1.3 trillion Swiss francs ($1.4 trillion) in assets under management at the end of 2022, down from 1.6 trillion a year earlier.
• With more than 150 offices in about 50 countries, Credit Suisse is the private bank for a large number of wealthy clients, both individuals and companies.