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UBS offers $1 billion to acquire Credit Suisse

 

Fabrice Coffrini / AFP via Getty Images


In order to avoid delaying the deal and ensure that it can be authorised before the markets open on Monday, the Swiss government will permit the bank to skip several regulations.


In a serious crisis that has rattled the European financial sector for the past week, UBS, the largest bank in Switzerland, makes a bid of $1 billion (about 930 million euros) to buy Credit Suisse, the country's second-largest company. The agreement might be finalised as late as Sunday night, before the markets open on Monday, according to the Financial Times. 


Credit Suisse is anticipated to continue losing market value if the accord is not certified and the future of the bank remains uncertain. The price per share in UBS's offer is 0.27 Swiss francs, but Credit Suisse's share price on Friday was 1.86 Swiss francs. If finalised, the agreement would establish one of the biggest banks in Europe and put an end to the confidence problem that was causing Credit Suisse to lose all of its money. As early as the fourth quarter of 2022, the Zurich-based company saw deposit leaks.


Despite the Swiss National Bank's assertions this week that it was largely meeting capital and liquidity requirements, consumers' worries that the bank's position would worsen with their savings inside have driven additional money flight amid the deluge of news. The once-reliable brand has now developed a terrible reputation for itself, which threatens the entire industry and damages the reputation of the once unimpeachable Swiss bank.


The significance of the agreement is evidenced by the participation of the Swiss government in the negotiations. The Swiss Executive is willing to give UBS permission to flout several laws so that the merger of the two biggest companies in the nation can happen as quickly as feasible. The government would specifically implement urgent procedures that would allow UBS to ignore its need to provide shareholders with a six-week consultation period.


According to the Reuters news agency, 10,000 jobs would be lost as a result of the merger, and UBS would be seeking government guarantees worth 6,000 million dollars (5,600 million euros).


A rapid speed of events is in progress. Less than two days after the Swiss National Bank decided to offer Credit Suisse loans worth up to 50 billion euros, negotiations are progressing quickly. At first, investors saw the public bailout as a strong lifeline that would keep the bank solvent going forward. 


The Saudi National Bank (SNB), the company's largest shareholder, announced it would stop providing new funding, which caused the stock market to crash and necessitated the transfer. 


On Thursday, when the public learned of the central bank's liquidity injection, its titles regained a substantial chunk of the ground they had lost, but the worries soon returned. The latest setback to the action on Friday, which resulted in a loss in the key stock indices in Europe and the US, of 8%, demonstrated how unfavourably the bank is still seen.











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