UBS holds talks to save Credit Suisse — report

Credit Suisse is in advanced talks to be taken over by its larger Swiss rival UBS, the Financial Times (FT) reported Saturday.

The beleaguered lender was given a $54 billion (€50 billion) lifeline by the country's central bank this week after investor confidence evaporated due to years of scandals, multi-billion dollar losses and the collapse of Silicon Valley Bank.

But the liquidity boost has failed to restore trust in the 167-year-old lender, whose shares have lost more than 75% of their value over the past twelve months.

What do we know so far?

Citing two unnamed sources, the FT said UBS was negotiating to buy all or part of Credit Suisse, with the blessing of Swiss regulators.

The Swiss National Bank (SNB) — the country's central bank — "wants the lenders to agree on a simple and straightforward solution before markets open on Monday," one of the sources told the paper.

The FT said the source acknowledged there was "no guarantee" of a deal but that the government was prepared to use emergency measures to fast track the merger.

One of the sources said significant obstacles were raised at the talks and 10,000 jobs may have to be cut if the two banks combine.

Bloomberg said another sticking point was Credit Suisse's investment banking business, which has underperformed.

The proposed plan could see Credit Suisse's domestic business spun off, the FT said.

Credit Suisse, the SNB and the Swiss financial watchdog FINMA all declined to comment about the talks.

Report: Swiss govt asked for $6 billion subsidy

Reuters news agency cited an unnamed source as saying that UBS is asking the Swiss government to cover about $6 billion in purchasing costs.

The cash would cover the cost of winding down parts of Credit Suisse and potential litigation charges, two people told Reuters.

The Swiss competition commission could also raise eyebrows depending on how the takeover is configured.

Bloomberg reported that Deutsche Bank was also looking at the possibility of buying some of Credit Suisse's assets.

A merger between Credit Suisse and UBS has been mooted before being dismissed due to monopoly concerns.

Swiss government officials held an urgent meeting with banking experts at the finance ministry in the capital Bern on Saturday evening, the Neue Zurcher Zeitung newspaper reported.

Markets remain on edge despite liquidity

Credit Suisse is the biggest name ensnared in the turmoil unleashed by the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week.

The bankruptcy sparked a rout in banking stocks, prompting authorities to rush out extraordinary measures to keep banks afloat and prevent contagion.

Like UBS, Credit Suisse is one of 30 financial institutions around the world deemed too big to fail, because of its systemic importance to the entire banking system.

The Zurich-based lender has been beset by scandals in recent years, and in 2022, suffered a net loss of $7.9 billion. It expects a "substantial" pre-tax loss this year.

"This is a bank that never seems to get its house in order," IG analyst Chris Beauchamp commented in a market note this week.

Despite this week's central bank injection, Credit Suisse struggled to regain the confidence of investors and by Friday evening Credit Suisse was worth just over $8.7 billion.

The FT reported that Credit Suisse customers withdrew 10 billion Swiss francs ($10.8 billion, €10.1 billion) in deposits in a single day late last week — a measure of how trust in the bank has vaporized.