Swiss banking giant UBS made an offer to buy its beleaguered rival Credit Suisse for up to $1 billion, according to the Financial Times on Sunday, citing four people with direct knowledge of the situation.
The deal, which the FT said could be signed by Sunday evening, values ​​Credit Suisse around $7 billion below its market value at Friday’s end.
The FT said UBS had offered a price of 0.25 Swiss francs ($0.27) per share to be paid in UBS stock. Shares of Credit Suisse ended Friday at 1.86 Swiss francs. The fast-moving nature of the negotiations means that the terms of any final deal could differ materially from those reported.
Credit Suisse is reportedly holding off on the offer, however, arguing that it is too low and would harm shareholders and employees, people with knowledge of the matter told Bloomberg.
Credit Suisse and UBS declined to comment on the report when contacted by CNBC.
Swiss authorities are reportedly considering full or partial nationalization of the bank as an alternative to the UBS takeover, according to a Bloomberg report on Sunday.
Bloomberg cited people with knowledge of the matter as saying that the UBS deal is being executed quickly, so the Swiss are preparing the matter. The country is reportedly considering whether to take over the bank outright or take a significant equity stake.
UBS’s offer comes after Credit Suisse shares posted their worst weekly decline since the start of the coronavirus pandemic, despite announcing it would receive a loan of up to 50 billion Swiss francs ($54 billion) from the Swiss central bank .
It was already reeling from a string of losses and scandals, and sentiment was shaken again last week as shares slid with the collapse of Silicon Valley Bank and the shuttering of Signature Bank in the US.
Credit Suisse’s scale and potential impact on the global economy far exceeds that of American banks. The Swiss bank’s balance sheet is almost twice the size of Lehman Brothers when it stood at around 530 billion Swiss francs by the end of 2022. It is also far more connected globally with many international subsidiaries – making a systematic management of Credit Suisse’s position even more important.
Credit Suisse lost about 38% of its deposits in the fourth quarter of 2022, and revealed in its delayed annual report earlier last week that the outflow has yet to reverse. It reported a full-year net loss of 7.3 billion Swiss francs for 2022 and expected further “substantial” losses in 2023.
The bank had previously announced a massive strategic overhaul to address these chronic issues, with current CEO and Credit Suisse veteran Ulrich Körner taking over in July.
