In order to prevent Credit Suisse (CS) from bankruptcy, Swiss authorities are pressuring UBS, the largest bank in Switzerland, to acquire CS. It is speeding up to evolve the situation within the weekend before the stock market opens.
On the 18th (local time), the Financial Times (FT) reported that the Swiss Financial Supervisory Authority (FINMA) is preparing emergency measures so that UBS can skip a shareholder vote if it acquires CS. Previously, Swiss authorities requested and initiated negotiations with Switzerland’s No. 1 bank UBS to acquire No. 2 bank CS. According to Swiss law, in this case, shareholders are normally given six weeks, but this emergency measure has eliminated this procedure.
On the 15th, CS suffered a crisis, such as a stock price plummeting by more than 30% at one time. The Swiss central bank announced that it would inject 50 billion Swiss francs (about 70.6 trillion won), but the stock price plunged 7% again on the 17th. When the anxiety did not subside even after providing liquidity on such a large scale, Finma stepped forward and negotiated the sale. The Swiss Central Bank and Finma announced on the 18th that “the sale of UBS is the only option to prevent the collapse of trust in CS.”
The main issue is whether UBS will acquire all or part of CS’s business. In the process, Reuters reported that UBS requested the Swiss authorities to pay $6 billion (approximately 7.857 trillion won) of the cost of acquiring CS. An official said, “Negotiations have faced significant obstacles. And if the two banks merge, 10,000 jobs could be lost.” Another two officials said, “The cost requested by UBS will be used for the cost of liquidating part of CS and potential litigation costs.”
The Wall Street Journal (WSJ) said, “The discussion is moving fast. The question that remains is who owns CS’s massive Swiss retail arm,” the source said.
Meanwhile, Bloomberg News reported that the United States is helping the negotiations by cooperating with the Swiss authorities. UBS and CS each have a presence in the US as well. Bloomberg reported that “US authorities are reviewing matters that may affect the final terms of the deal.” It is said that the UK is also in contact with CS over the sale issue.
Silicon Valley Bank (SVB) and Signature Bank went bankrupt this month, and governments around the world are keenly aware of the possibility that this crisis will spread throughout the banking sector. Bank liquidity shortages caused by interest rate hikes are causing bank stock prices to drop, and depositors are making large-scale withdrawals. Bloomberg reported on the 19th that even Chairman Warren Buffett, who leads the investment company Berkshire Hathaway, met with the US administration of Joe Biden several times last week to discuss the banking crisis.
