UBS reportedly in takeover talks with Credit Suisse amid turmoil


Switzerland’s biggest bank, UBS, is reportedly in talks to take over struggling rival Credit Suisse, a move that could ease growing fears that the European banking giant’s turmoil could spill over to the global economy.

The boards of directors of the two largest Swiss banks are meeting this weekend to discuss a merger project from Saturday evening, according to a Financial Times report. The talks are the latest development in more than a week of tumult and fears over the resilience of the global financial system following the shocking collapse of Silicon Valley Bank and subsequent actions by Wall Street and regulators to shore up major institutions. financial.

Top banking regulators in the US, Britain and Switzerland are also considering the legal structure of a deal, as UBS seeks concessions, including some form of government agreement to cover future legal costs. , according to the Financial Times. Credit Suisse shares jumped 7% in after-hours trading.

What to know about the Credit Suisse crisis and its global impact

Credit Suisse and UBS declined to comment. The Swiss National Bank and the US Federal Reserve did not immediately respond to requests for comment.

Germany’s Deutsche Bank is also looking at whether it could acquire some Credit Suisse businesses, according to a Bloomberg News reporting.

A takeover could limit fears that turmoil at Credit Suisse and several troubled financial institutions in the United States could create banking contagion, similar to the events of the 2008 financial crisis. Even after the actions of governments and institutions financials this week, the stock market showed lingering concern that the tumult in the banking sector has not subsided. Still, experts say the financial system appears to be on solid footing and stock market volatility may reflect current events rather than a signal of a wider crisis.

The talks follow a week of chaos for Credit Suisse. On Thursday, the Swiss central bank provided the company with a A $53.7 billion liquidity lifelineafter the bank revealed “significant weaknesses” in its financial reports.

But Credit Suisse’s underlying problems began long before the recent problems at banks in the United States. The 167-year-old bank, which originally served the ultra-wealthy, suffered financial losses, risk and compliance issues and a critical data breach. Credit Suisse revealed in October that it had suffered large customer withdrawals and that in 2021 it had suffered significant losses due to its exposure to collapse of Archegos Capital Management, based in New York.

Removals in Europe follow a announcement Thursday that 11 of the largest banks in the United States would deposit $30 billion in the First Republic Bank. The move was intended to strengthen the bank and send a signal about the broader security of the US financial system. Meanwhile, Silicon Valley Bank’s parent company filed for Chapter 11 bankruptcy on Friday.

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