UBS acquisition deal for more than $2 billion

UBS Group AG has agreed to buy Credit Suisse for more than $2 billion, according to the Financial Times.

However, neither bank agreed to comment on the information.

UBS will pay more than 0.50 francs for each Credit Suisse share, much lower than the price at which the bank’s shares closed on Friday (1.86 francs), according to the Financial Times.

The newspaper said, citing two people familiar with the matter, that the Swiss central bank had agreed to provide a $100 billion liquidity line to Credit Suisse as part of the deal.

A person familiar with the talks told Reuters earlier that UBS was seeking $6 billion from the Swiss government to buy its rival.

Swiss state broadcaster SRF and other media reported that the government will hold an “important” press conference later today, without elaborating.

It is noteworthy that Credit Suisse shares lost a quarter of their value last week. The bank was forced to secure a $54 billion bailout from the Swiss Central Bank as it tries to recover from scandals that have hurt investor and customer confidence.

Earlier, it was known that the full or partial nationalization of Credit Suisse was being considered by the Swiss authorities, considering it the only viable option other than the takeover by the UBS Group.

Also during the day, Bloomberg News reported, Credit Suisse rejected a takeover bid from UBS, after the Financial Times reported that UBS Group had offered up to $1 billion.

Citing people familiar with the matter, Bloomberg News writes that Credit Suisse is resisting the proposal because it believes the amount is too low and would hurt the bank’s shareholders and employees who own shares in the company that would be paid last in line. Bankruptcy (deferred stock).

According to the Financial Times, Switzerland’s largest bank, UBS Group AG, has offered to buy Credit Suisse for up to $1 billion as the Swiss government plans to change the country’s law to bypass a shareholder vote on the takeover.

Switzerland’s largest bank, UBS, is under pressure from the authorities to end its takeover of rival Credit Suisse today in hopes of avoiding collapse and spreading market panic tomorrow, Monday.

A task force to prevent the loss of 17,000 jobs

At the same time, the Federation of Swiss Bank Employees has called for the immediate creation of a task force to deal with the risk of job losses at Credit Suisse.

The federation announced on Saturday that it had contacted Credit Suisse and that the proposed strike team would include representatives of management staff and trade unionists.

“There is a huge stake for about 17,000 CS employees in Switzerland, and therefore for our national economy,” he stressed.

Secrets, lies, spies and government money: all in one crisis

For Switzerland’s second largest bank – with assets of around $500bn – the pressure intensified sharply after the collapse of two regional banks in the US. But the problems started much earlier.

Loan – the lifeblood of the central bank

Last week, Credit Suisse was forced to agree to borrow up to 50 billion francs from the Swiss Central Bank for $54 billion to boost liquidity and investor confidence after its shares fell to record lows, and a bank panic shook the markets. It was the first international bank to receive an emergency bailout since 2008.

“weak” and “no” Saudis

A few days earlier, Credit Suisse reported “material weaknesses” in its internal controls over financial reporting and its stock took a hit. Then its largest shareholder, the National Bank of Saudi Arabia, got a question: Are you going to inject capital, if necessary? “No, no way” was the disarming response that sent shares down 30% and caused European bank stocks to bleed as a whole.

The uncontrolled outflows of 2022

Credit Suisse reported in February 2023 a total net loss of more than CHF7 billion for 2022, the worst performance since the 2008 global crisis, and warned of significant pressures in 2023 as well. 110 billion Swiss francs from its customers.

Cocaine and money laundering

In June 2022, the bank was found guilty of failing to prevent money laundering by a Bulgarian cocaine-smuggling ring. The court found deficiencies in Credit Suisse both in managing customer relations (it was dealing with a criminal organization) and in monitoring the implementation of anti-money laundering rules.

Both Credit Suisse and the convicted former employee have denied any wrongdoing. Credit Suisse said it would appeal the ruling.

Bermuda scam

A Bermuda court ruled in March 2022 that former Georgian prime minister Bidzina Evansvili and his family should receive more than half a billion dollars in compensation from Credit Suisse’s local life insurance arm.

The court said that Ivanishvili and his family suffered damages as a result of a long-running fraud committed by Pascal Lescondron, a former Credit Suisse adviser.

Liscondron was found guilty by a Swiss court in 2018 of forging signatures of former clients, including Evansville, over a period of eight years. Credit Suisse said the case would cost him around $600 million.

secrets

Credit Suisse denied allegations of wrongdoing after dozens of media outlets published in February 2022 the results of coordinated Panama Papers-style investigations into the data leaks on thousands of customer accounts over the past decades.

The resignation of the President of the Republic

President Antonio Horta Osorio resigned in January 2022 after violating the COVID-19 quarantine rules. The resignation came less than a year after he joined Credit Suisse to clean up the company’s culture and image, again tarnished by exposure to the Archegos family office scandal and insolvent finance firm Greensill Capital.

Archegos scandal

Credit Suisse lost $5.5 billion when US family office Archegos Capital Management went bankrupt in March 2021. The hedge fund’s highly leveraged bets on some tech stocks failed and Credit Suisse’s portfolio plummeted.

An independent report on the incident criticized the bank’s conduct, saying its losses were the result of a fundamental failure in risk management.

The Collapse of Grinsel Funds

Credit Suisse was forced to freeze $10 billion in supply chain finance funds in March 2021 when British financier Greensill Capital collapsed after losing the debt insurance cover it had issued for its corporate loans. Swiss regulators have berated Credit Suisse for “serious” failures in its handling of multibillion-dollar deals with Grinsel.

Shareholders’ anger

In early 2021, Credit Suisse shareholders rejected a proposal by the bank’s board of directors to relieve the management of other liabilities for 2020, underscoring investor anger over the bank’s costly mistakes.

Espionage scandal

Credit Suisse chief executive Titian Thiam was forced to resign in March 2020 after an investigation found the bank hired private investigators to spy on former wealth management chief Iqbal Khan after he left for UBS. Switzerland’s financial watchdog said it had been misled by Credit Suisse about the extent of the spying. The regulator said the bank planned seven different spying operations between 2016 and 2019 and carried out most of them.

In response, Credit Suisse said it condemned the spying and had taken “decisive” steps to improve its management and strengthen compliance.

A task force is required to prevent the loss of 17,000 jobs

At the same time, the Federation of Swiss Bank Employees called today for the immediate creation of a task force to deal with the risks of job losses at Credit Suisse.

The federation announced on Saturday that it had contacted Credit Suisse and that the proposed strike team would include representatives of management staff and trade unionists.

“There is a huge stake for about 17,000 CS employees in Switzerland, and therefore for our national economy,” he stressed.