UBS to buy rival Credit Suisse worth more than $2 billion. This is what an article by Bloomberg reports, speaking of a historic agreement aimed at putting an end to the crisis that besieged CS.
According to the terms of the deal reported by the Financial Times, the Swiss central bank Swiss National Bank (SNB) will offer approximately $100 billion of additional liquidity to UBS.
Not only. To save the bank, which with its problems has continued to depress markets around the world despite the intervention of the Swiss National Bank, the Swiss authorities are reportedly working on a law that would bypass the vote of Credit Suisse shareholders, thus speeding up the sale of the giant to rivale Ubs.
UBS would therefore have decided to increase its initial offer aimed at incorporating Credit Suisse, from 0.25 Swiss francs per share (about $1 billion) to 0.50 Swiss francs per share, for a total amount exceeding $2 billion.
Even if revised upwards, the proposal nevertheless remains well below the value at which the CS stock closed last Friday’s session, equal to 1.86 Swiss francs.
The press release from the Swiss National Bank follows:
“Con the takeover of Credit Suisse by Ubsa solution has been found to ensure financial stability and protect the Swiss economy in this exceptional situation”.
The SNB stressed how it has been working with the Swiss government and the Swiss Financial Market Supervisory Authority to accelerate the combination between CS, a bank recovering from a deposit flight and a series of various scandals, and UBS.
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UBS’s offer came after Credit Suisse stock, battered by the sell-off, closed the worst week since the outbreak of the Covid-19 pandemic in 2020after the bank has panicked global financial markets, frozen by fears of a new 2008-style banking crisis.
In order to buffer the crisis, in recent days the Swiss central bank has come forward announcing its full willingness to help the banking giant. Availability which was readily accepted, with Credit Suisse announcing the intention to borrow up to CHF 50 billion from the SNB.
The assist that the news gave to the Credit Suisse stock however, it lasted for one session.
Worsening sentiment on banking stocks, fueled by new worries that arose in the United States with the caso First Republic Bank , another US regional bank that paid attention to the markets shortly after the collapse of Silicon Valley Bank (SVB) and Signature Bank, has returned to penalize the Credit Suisse stock, which fell again in last Friday’s session, discouraged for the umpteenth time by the markets.
Credit Suisse, it is worth remembering, is a systemic bank, whose eventual failure would have impressive repercussions on the economy and on world markets, far beyond the historic case of the Lehman Brothers crash. The balance sheet of the Swiss banking giant is in fact double the size of Lehman Brothers at the time of its collapse, with a value of around 530 billion Swiss francs (data relating to the end of 2022).
The group is also much more connected to global finance than Lehman Brothers was in 2008, having several subsidiaries located around the world.
To get an idea of the gravity of the problems that have beset the group for some time, just refer to a few figures: in the fourth quarter of 2022 alone, CS lost 38% of its deposits, in the wake of the bank run. , launched by his clients worried about his fate (and the fate of their accounts).
For the whole of 2022, the giant suffered a net loss of 7.3 billion francs, expecting a further “significant” loss in 2023.
The new collapse of the stock in Friday’s session convinced the Swiss stock market authorities to focus even more on the UBS solution. Initially the offer to take over Credit Suisse hovered around $1 billion, a value which, according to various sources, was promptly rejected by the bank. Reason: The proposal would have been too low, and would have hurt both shareholders and employees.
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(under writing)