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Credit Suisse faces demise as UBS, Swiss regulators discuss takeover

The Swiss National Bank (SNB) and Swiss regulator FINMA have told their international counterparts they regard a deal with UBS Group as the only way to prevent a collapse in confidence in Credit Suisse Group, the Financial Times reported.

UBS, Credit Suisse and key regulators are rushing to finalise a deal on a possible takeover or merger of the two Swiss banks as soon as Saturday evening, the FT reported, citing people familiar with the matter.

FINMA declined to comment on the FT report of a possible deal, which could lead to an abrupt end to the 167-year old bank — Switzerland’s second largest financial institution.

UBS and Credit Suisse did not immediately respond to a Reuters request for comment.

Reuters earlier reported that UBS was coming under pressure from the Swiss authorities to carry out a takeover of its rival to get the market turmoil surrounding Credit Suisse under control.

The latest plan could see the Swiss government offer a guarantee against the risks involved, while Credit Suisse’s Swiss business could be spun off.

An earlier injection of more than $50 billion from the SNB failed to assure Credit Suisse depositors, who continued to pull out their money from the bank. 

Troubled Credit Suisse has two days to reassure before the markets open on Monday with the spectre of a new turbulent week in global finance looming.

The Zurich-based lender was holding crisis talks this weekend and urgent meetings with Swiss banking and regulatory authorities.

Fears of banking crisis haunt global stock markets

SNB “wants the lenders to agree on a simple and straightforward solution before markets open on Monday”, a source told AFP news agency, while acknowledging there was “no guarantee” of a deal.

UBS would require public guarantees to cover legal costs and potential losses, according to a report by Bloomberg, citing anonymous sources.

‘Serious breaches’

While Swiss financial watchdog FINMA and the SNB have said that Credit Suisse “meets the capital and liquidity requirements imposed on systemically important banks”, mistrust remains.

Credit Suisse has been scandal-plagued for the past two years with its own management admitting “material weaknesses” in their “internal control over financial reporting”.

FINMA accused the bank of having “seriously breached its supervisory obligations” in its relationship with the disgraced financier Lex Greensill and his companies.

In 2022, the bank suffered a net loss of $7.9 billion, against the backdrop of massive withdrawals of money from its customers. It still expects a “substantial” pre-tax loss this year.

READ MORE: What’s causing the Credit Suisse scare and the drop in global stocks?

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