- A sale to UBS, which could be signed as early as this evening, values Credit Suisse at about $7 billion less than its market value at Friday’s close.
- It comes after Credit Suisse shares posted their worst weekly drop since the start of the coronavirus pandemic.
- This despite the announcement that it would access a loan of up to 50 billion Swiss francs ($54 billion) from the Swiss central bank.
A customer walks to an automatic teller machine (ATM) inside a Credit Suisse Group AG bank branch in Geneva, Switzerland, Thursday, Sept. 1, 2022.
Jose Cendon Bloomberg | Getty Images
Swiss banking giant UBS offered to buy rival Credit Suisse for up to $1 billion on Sunday, according to the Financial Times, citing four people with direct knowledge of the situation.
The deal, which the FT says could be signed as early as Sunday evening, values Credit Suisse at about $7 billion less than its market value at Friday’s close.
The FT said UBS had offered a price of 0.25 Swiss francs ($0.27) per share payable in UBS shares. Shares of Credit Suisse ended Friday at 1.86 Swiss francs. The fast-paced nature of the negotiations means that the terms of any final agreement could differ from those reported.
However, Credit Suisse is reportedly rejecting the offer, arguing that it is too low and would harm shareholders and employees, people with knowledge of the matter told Bloomberg.
Credit Suisse declined to comment on the reports when contacted by CNBC.
UBS’s offer comes after Credit Suisse shares posted their worst weekly fall since the start of the coronavirus pandemic, despite an announcement that it would take out a loan of up to 50 billion Swiss francs (54,000 million dollars) from the Swiss central bank.
It had already been battling a series of losses and scandals, and sentiment was rocked again last week with the collapse of Silicon Valley Bank and the closing of Signature Bank in the US, sending shares tumbling.
Credit Suisse’s scale and potential impact on the global economy is far greater than that of US banks. The Swiss bank’s balance sheet is about twice the size of Lehman Brothers when it collapsed, at around 530 billion Swiss francs at the end of 2022. It is also much more interconnected globally, with multiple international subsidiaries, which makes orderly management of Credit Suisse’s situation all the more important.
Credit Suisse lost around 38% of its deposits in the fourth quarter of 2022 and revealed in its delayed annual report earlier last week that outflows have yet to reverse. It reported a full-year net loss of 7.3 billion Swiss francs for 2022 and expects a further “substantial” loss in 2023.
The bank had previously announced a massive strategic review to try to address these chronic problems, with current CEO and Credit Suisse veteran Ulrich Koerner taking over in July.
This is a developing story. Check back for updates.