Swiss Banking Giant UBS Offers to Buy Embattled Rival Credit Suisse for $1 Billion
UBS, the Swiss banking giant, has offered to acquire Credit Suisse, its embattled rival, for up to $1 billion, according to the Financial Times. The deal, which is set to be signed soon, values Credit Suisse at approximately $7 billion less than its market value at Friday’s close.
The fast-moving nature of the negotiations means the terms of any final deal could differ from those reported. Credit Suisse has declined to comment on the report.
Credit Suisse shares had been experiencing their worst declines since the onset of the coronavirus pandemic, despite the announcement that the bank would access a loan of up to 50 billion Swiss francs ($54 billion) from the Swiss central bank.
This dire situation was compounded by a string of losses and scandals that have continuously plagued Credit Suisse over the years. Last week marked the collapse of Silicon Valley Bank and the shuttering of Signature Bank in the U.S., further contributing to the bank’s plummeting shares.
Credit Suisse’s scale and potential impact on the global economy are much greater than that of U.S. banks. Its balance sheet is approximately twice the size of Lehman Brothers when it collapsed, at around 530 billion Swiss francs as of the end of 2022. The bank is also far more globally inter-connected, with multiple international subsidiaries, making its situation’s orderly management even more crucial.
Credit Suisse had already reported a full-year net loss of 7.3 billion Swiss francs for 2022 and expects a further ‘substantial’ loss in 2023. It had previously announced a massive strategic overhaul, with the current CEO, and Credit Suisse veteran Ulrich Koerner, taking over in July.
This acquisition could significantly shape the future of the global banking industry, considering the vast size of the Swiss banking market, which is home to several key global banks.
UBS’s acquisition of Credit Suisse could have significant ramifications for the global financial sector, especially given the ongoing pandemic-related uncertainties. It remains to be seen what effect this acquisition will have on the global economy, but it undoubtedly marks a significant development for the Swiss banking industry.#UBS #offers #buy #Credit #Suisse #billion #Financial #Times #reports