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The Financial Times published a news investigation revealing talks between UBS, the largest Swiss bank, on the one hand, and Credit Suisse, on the other, with the aim of the first acquiring the second, whether in whole or in part. Shares of Credit Suisse fell by 8 percent when the financial markets closed last Friday evening, affected by the collapse of the American Silicon Valley bank. Credit Suisse is considered a weak link in the banking sector due to a number of scandals that have engulfed it for the past two years.
A newspaper report revealed Financial Times UBS, the largest Swiss bank, is in talks to acquire Credit Suisse in whole or in part.
Credit Suisse, the second largest Swiss bank, faced pressure this week after the collapse of two US lenders caused a crisis in the sector. By the close of financial markets on Friday, the bank’s shares were down 8 percent.
The Swiss Central Bank and the Financial Markets Supervisory Authority told their counterparts in the United States and Britain that their “first” plan to end the confidence crisis facing “Credit Suisse” is to merge it with USB, the Financial Times quoted unnamed sources.
The source said that the Swiss Central Bank “wants lenders to agree on a simple and direct solution before the opening of financial markets on Monday,” acknowledging at the same time that “there is no guarantee” of reaching an agreement.
USB wants to assess the risks a full or partial takeover of its competitor could pose to its business, another source told the newspaper.
The Swiss Central Bank and Credit Suisse declined to respond to AFP’s request for comment, while USB and the watchdog did not immediately respond.
Credit Suisse, which has been in trouble for two years, was seen as a weak link in the banking sector due to a number of scandals and a major restructuring program launched last October.
Its market value took a big hit this week amid fears of a contagion from the collapse of two US banks, Silicon Valley Bank and Signature Bank. This is in addition to the publication of its annual report, which indicated “fundamental weaknesses” in its internal controls.
However, its shares fell sharply on Wednesday after the Saudi National Bank, its main shareholder, refused to provide more financial assistance to the troubled bank due to regulatory controls.
By Wednesday evening, the Swiss central bank had pledged to lend Credit Suisse $53.9 billion in the face of pressure.
Analysts from JPMorgan had put forward the idea of USP acquiring Credit Suisse, considering it the “most likely” scenario.
The idea of merging the largest Swiss banks often arises, but it is generally rejected against the backdrop of competition and the risks it poses to the stability of the Swiss financial system, given the size of the bank that will result from that merger.