Are UBS and Credit Suisse Discussing a Possible Takeover?

Zurich/Berlin

According to a report in the Financial Times, major Swiss bank UBS is said to be interested in acquiring part or all of its struggling rival Credit Suisse. As reported by the newspaper, citing informed sources, the supervisory boards of the two largest Swiss credit institutions want to meet separately at the weekend for appropriate consultations. It would be the biggest banking merger in Europe since the financial crisis. Asked on Saturday, UBS and Credit Suisse said they would not comment.

According to the report, the Swiss National Bank and Swiss regulator Finma are organizing talks to boost confidence in the country’s banking sector. Regulators have told their US and UK counterparts that the merger of the two banks is their “Plan A”. Other options will also be discussed. The Swiss National Bank wants to find an uncomplicated solution before the markets open on Monday. The Financial Times wrote that there was no guarantee that an agreement would be reached. According to the newspaper, the Bank of England and the Federal Reserve declined to comment.

Reeling major Credit Suisse has recently suffered a significant loss of investor confidence. The share price fell to a record low after the bank’s largest investor ruled out providing more capital and the institution continued to struggle with cash outflows. Then the Swiss National Bank (SNB) provided the institute with loans amounting to 50 billion Swiss francs (about 51 billion euros). For the central bank, financial regulators and government, it is also about preventing a general banking crisis.

The merger will have far-reaching consequences

A full merger would create one of the largest financial institutions of systemic importance in Europe. The total balance sheet of UBS – the largest Swiss bank – was the equivalent of 1030 billion euros in 2022, and that of Credit Suisse the equivalent of 535.44 billion euros. UBS made $7.6 billion in revenue in 2022 (currently $7.07 billion). On the other hand, Credit Suisse announced a loss of 7.3 billion Swiss francs (7.4 billion euros).

In the entire past financial year, Credit Suisse clients withdrew assets of around CHF 123 billion. The bank’s market capitalization has fallen by nearly two-thirds to nearly nine billion francs in the past 12 months. At its peak in the mid-1990s, the bank was worth more than 110 billion francs.

Chancellor Olaf Schultz (SPD) sees no danger of a new big crisis in Germany and Europe after the collapse of the startup financier Silicon Valley Bank, which started the banking shake-up, and the turmoil that surrounded Credit Suisse – and no consequences for German savers. The monetary system is no longer as fragile as it was before the financial crisis. Deposits are safe, he recently told Handelsblatt.

Claims from Germany

FDP’s faction leader Bundestag“The security mechanisms are better today than they were 15 years ago,” said Christian Dorr. Referring to the recent hike in interest rates in the eurozone, he said so European Central Bank Independent and committed to monetary stability. “The stability of funds is very important for confidence in the economy and households,” Dorr told Mediengruppe Bayern. “It would be a big mistake to ignore this because individual banks have been poorly managed.”

The Finanzwende citizens’ movement called on Finance Minister Christian Lindner (FDP) to regulate financial markets more strictly. A stable financial system is finally needed, as promised 15 years ago, according to the club in a petition it launched on Saturday. In it, Finanzwende calls for the completion of the European Banking Union, the introduction of a separate banking system and a financial transaction tax, as well as the regulation of shadow banks. “After the financial crisis of 2008, strict rules must be put in place for banks,” said Gerhard Schick, member of the Finanzwende Board of Directors. However, the regulation of financial markets is not up to the challenges of our time.

_{note: This report is part of an automated service provided by the German Press Agency (dpa), which operates under strict journalistic rules. It is not edited or vetted by AZ Online Editors. Questions and hints please feedback@az-muenchen.de}