UBS Group Offers to Buy Credit Suisse Group for Up to $1 Billion
UBS Group AG has offered to buy Credit Suisse Group AG for as much as $1 billion, in a bid to stabilize the Swiss banking sector and avert a deep crisis of confidence. Talks between UBS, Credit Suisse, the Swiss National Bank (SNB) and other regulators are ongoing, and the terms of any end deal could be different from those reported.
UBS is asking the Swiss government to take on certain legal costs and potential future losses in any takeover, and has tabled an offer of about $1 billion for Credit Suisse, which the smaller Swiss bank believes is too low. The UBS offer was communicated on Sunday with a price of 0.25 francs a share to be paid in UBS stock, and included a material adverse change that voids the deal if its credit default spreads jump by 100 basis points or more.
Representatives for UBS, Credit Suisse, and the Swiss finance ministry have declined to comment, while the Bank of England and Finma have not responded to requests for comment.
Credit Suisse has been brought to the brink of financial calamity despite securing a $54bn loan from Switzerland’s central bank several days ago. The Swiss lender is considered a systemically important bank, employing approximately 5,000 people in the UK, and its potential collapse could have wide-reaching implications for the global financial system.
UBS is hoping to avert a contagion that could evoke comparisons with the crisis of 2008, when banks including Bear Stearns and Lehman Brothers collapsed. As of Friday’s close, UBS had a market cap of $57.9B, while Credit Suisse, which has seen its stock plunge 73% Y/Y, finished the session with an $8.6B market value. Talks are accelerating, and all sides are pushing for a quick solution to be announced by Sunday evening at the latest.
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