NEW DELHI: UBS has agreed to buy Credit Suisse after increasing its offer to more than $2 billion, the Financial Times reported on Sunday.
UBS Group AG has been in emergency talks to buy the fellow Swiss banking giant as authorities bid to stave off turmoil when markets reopen on Monday.
Earlier, reports said that UBS has offered to pay up to $1 billion.
However, Credit Suisse, which ended Friday with a market value of about 7.4 billion francs ($8 billion), believed that the offer is too low and would hurt shareholders and employees who have deferred stock, people with knowledge of the matter told Bloomberg.
Officials have been racing to rescue the 167-year-old bank, among the world’s largest wealth managers, after a brutal week that saw the second- and third-largest US bank failures in history. As one of 30 global banks seen as systemically important, any deal for Credit Suisse could ripple through global financial markets.
At least two major banks in Europe are examining scenarios of contagion possibly spreading in the region’s banking sector and looking to the Federal Reserve and the European Central Bank to step in with stronger signals of support, two senior executives with knowledge of the discussions told Reuters.
If the takeover falls apart, Switzerland is considering taking over the bank in full or holding a significant equity stake, Bloomberg reported.
Credit Suisse and UBS declined to comment, and the Swiss government did not immediately respond to a request for comment.
The Financial Times reported that the all-share deal may be signed on Sunday. Citing people familiar with the matter, it said an offer made on Sunday was of 0.25 Swiss francs ($0.27) per Credit Suisse share, well below Friday’s closing price of 1.86 Swiss francs and all but wiping out the bank’s existing shareholders.
UBS has also insisted on a “material adverse change” that voids the deal if its credit default spreads jump by 100 basis points or more, the report added. It said there was no guarantee terms will remain the same or that a deal would be reached.
A person with knowledge of the talks earlier told Reuters that UBS sought $6 billion from the Swiss government as part of a possible purchase of its rival. The guarantees would cover the cost of winding down parts of Credit Suisse and potential litigation charges.
One source previously said the talks were encountering significant obstacles, and 10,000 jobs may have to be cut if the two banks combined. The Swiss Bank Employees Association on Sunday called for the immediate creation of a task force to deal with the risk to jobs.
Swiss broadcaster SRF and other media reported that the government would hold an “important” press conference later on Sunday. They did not give any more details.
Credit Suisse shares lost a quarter of their value last week. The bank was forced to tap $54 billion in central bank funding as it tries to recover from scandals that have undermined the confidence of investors and clients.
UBS Group AG has been in emergency talks to buy the fellow Swiss banking giant as authorities bid to stave off turmoil when markets reopen on Monday.
Earlier, reports said that UBS has offered to pay up to $1 billion.
However, Credit Suisse, which ended Friday with a market value of about 7.4 billion francs ($8 billion), believed that the offer is too low and would hurt shareholders and employees who have deferred stock, people with knowledge of the matter told Bloomberg.
Officials have been racing to rescue the 167-year-old bank, among the world’s largest wealth managers, after a brutal week that saw the second- and third-largest US bank failures in history. As one of 30 global banks seen as systemically important, any deal for Credit Suisse could ripple through global financial markets.
At least two major banks in Europe are examining scenarios of contagion possibly spreading in the region’s banking sector and looking to the Federal Reserve and the European Central Bank to step in with stronger signals of support, two senior executives with knowledge of the discussions told Reuters.
If the takeover falls apart, Switzerland is considering taking over the bank in full or holding a significant equity stake, Bloomberg reported.
Credit Suisse and UBS declined to comment, and the Swiss government did not immediately respond to a request for comment.
The Financial Times reported that the all-share deal may be signed on Sunday. Citing people familiar with the matter, it said an offer made on Sunday was of 0.25 Swiss francs ($0.27) per Credit Suisse share, well below Friday’s closing price of 1.86 Swiss francs and all but wiping out the bank’s existing shareholders.
UBS has also insisted on a “material adverse change” that voids the deal if its credit default spreads jump by 100 basis points or more, the report added. It said there was no guarantee terms will remain the same or that a deal would be reached.
A person with knowledge of the talks earlier told Reuters that UBS sought $6 billion from the Swiss government as part of a possible purchase of its rival. The guarantees would cover the cost of winding down parts of Credit Suisse and potential litigation charges.
One source previously said the talks were encountering significant obstacles, and 10,000 jobs may have to be cut if the two banks combined. The Swiss Bank Employees Association on Sunday called for the immediate creation of a task force to deal with the risk to jobs.
Swiss broadcaster SRF and other media reported that the government would hold an “important” press conference later on Sunday. They did not give any more details.
Credit Suisse shares lost a quarter of their value last week. The bank was forced to tap $54 billion in central bank funding as it tries to recover from scandals that have undermined the confidence of investors and clients.
