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UBS
Group could complete a takeover of
Credit Suisse
Group as soon as Saturday evening, according to the Financial Times, as regulators rush to ink a merger of Switzerland’s two largest banks against a backdrop of industry turmoil.
Both the
Swiss National Bank
and regulator Finma now see UBS’s (ticker: UBS) purchase as the only option to tame mounting woes at Credit Suisse (CS), the FT reported on Saturday, citing anonymous sources close to the negotiations.
Credit Suisse declined to comment on the report, while UBS didn’t respond to Barron’s request for comment.
BlackRock
(BLK) was previously cited as another possible suitor, although it has since publicly denied that it’s involved in a takeover.
The urgency for a deal comes as investors continue to pull money from Credit Suisse, which saw outflows of nearly $11 billion a day late this past week. The bank also saw more than $450 million in net outflows from its U.S. and European managed funds from March 13 to 15, Morningstar Direct said on Friday, as retail and institutional counterparties pulled money out of funds managed by the embattled Swiss lender.
The potential end of Credit Suisse as a stand-alone entity 167 years after its founding isn’t entirely a surprise: The bank has dealt with a string of problems in recent years, from worries about its financial controls to government probes, courtroom setbacks, and several quarters of eye-watering losses, among other issues, that have left investors wondering if it will survive.
Yet the timetable for a resolution has become supercharged in recent weeks, in the wake of high-profile bank failures in the U.S., most notably Silicon Valley Bank, whose assets are also in the market for a buyer.
SVB’s closing touched off worldwide fears about the health of the industry, leading many customers to try to withdraw their funds and putting particular pressure on weaker banks’ stocks amid big market swings. Credit Suisse shares fell more than 17% over the past five trading days, and have lost over a third of their value so far in 2023.
UBS was also hit by the selloff in financial stocks, falling more than 7% in the past week, although it’s down just 4% this year.
According to the FT’s sources, talks are now centered on concessions UBS is seeking should it go through with a deal. The bank wants to be able to phase in any global capital regulations over time and secure protection from ongoing legal costs, which Credit Suisse has previously warned could cost it some $2 billion.
Write to Teresa Rivas at teresa.rivas@barrons.com
Read the full article here
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