The US economic agency “Bloomberg” reported, on Sunday, that the Swiss authorities are considering the full or partial nationalization of the Credit Suisse bank, which is suffering from a major crisis.
What did the leaks say about the nationalization hypothesis?
- The agency quoted people familiar with the matter as saying that this solution appears to be the only practical solution to save Credit Suisse, away from the offer of the competing bank, UBS, to acquire it.
- Media reports had previously stated that Credit Suisse, which was founded in 167 years, is resisting the purchase offer made by its largest competitor, UBS, as it considers it too low and would harm its shareholders and employees who have shares in the bank.
Bond holders took some losses
- Two informed sources said today, Sunday, that the Swiss authorities are also considering charging holders of Credit Suisse bonds losses as part of a rescue package.
- The two sources indicated that the Swiss authorities had not yet taken a decision on this step and some of its conditions could still be changed.
- A source said that the authorities may find no alternative but to increase the amount of losses that bondholders will bear if Credit Suisse’s operations are reduced rather than taken over by UBS. The authorities are seeking to end the UBS takeover of its smaller rival, before financial markets reopen on Monday.
News worry Europe
- The two sources, speaking on condition of anonymity, added that regulators in Europe were concerned about such a move and feared it could affect investor confidence elsewhere in the European financial sector.
- Swiss financial market watchdog FINMA has not yet responded to a Reuters request for comment. Credit Suisse and UBS declined to comment.
Credit Suisse status
- Credit Suisse saw significant declines last week amid concerns about the bank’s collapse.
- As one of the 30 most important banks in the global banking sector, the failure of Credit Suisse will have an impact throughout the financial system.
