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Credit Suisse weighs options as merger with UBS looms

Credit Suisse Group AG began a make-or-break weekend of deliberation after some rivals grew cautious in their dealings with the bank as regulators urged it to pursue a deal with Swiss rival UBS AG.

Credit Suisse secures USD 54 bn lifeline to shore up liquidity

Credit Suisse on Thursday said it would borrow up to USD 54 bn from the Swiss central bank to shore up liquidity and investor confidence after a…

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Credit Suisse Chief Financial Officer Dixit Joshi and his teams will hold meetings over the weekend to assess strategic scenarios for the bank, close sources said on Friday.

The 167-year-old bank is the biggest name entangled in market turmoil unleashed by the collapse of U.S. lenders Silicon Valley Bank and Signature Bank over the past week, forcing the Swiss bank to tap USD 54 billion in central bank funding.

Swiss regulators are encouraging UBS and Credit Suisse to merge but neither bank wants to do so, a source said. The regulators do not have the power to force the merger, the person said.

The boards of UBS and Credit Suisse were expected to separately meet over the weekend, the Financial Times reported.

Credit Suisse shares jumped 9 percent in after-market trading, following the FT report. Credit Suisse and UBS declined to comment.

At least four major banks, including Societe Generale SA and Deutsche Bank AG, have put restrictions on their trades involving Credit Suisse or its securities, five people with direct knowledge of the matter told Reuters.

“The Swiss central bank stepping in was a necessary step to calm the flames, but it might not be sufficient to restore confidence in Credit Suisse, so there’s talk about more measures,” said Frederique Carrier, head of investment strategy at RBC Wealth Management.

Global concerns of banking crisis

Efforts to shore up Credit Suisse come as policymakers including the European Central Bank and U.S. President Joe Biden sought to reassure investors and depositors the global banking system is safe. But fears of broader troubles in the sector persist.

Already this week, big U.S. banks provided a USD 30 billion lifeline for smaller lender First Republic, while U.S. banks altogether sought a record USD 153 billion in emergency liquidity from the Federal Reserve in recent days.

In Washington, the focus turned to greater oversight to ensure that banks, and their executives, are held accountable.

Biden called on Congress to give regulators greater power over the banking sector, including imposing higher fines, clawing back funds, and barring officials from failed banks.

Some Democratic lawmakers asked regulators and the Justice Department to probe the role of Goldman Sachs in SVB’s collapse, said the office of Representative Adam Schiff.

Impact of Silicon Valley Bank collapse

Banking stocks globally have been battered since Silicon Valley Bank collapsed, raising questions about other weaknesses in the financial system.

SVB Financial Group filed for bankruptcy court-supervised reorganization, days after regulators took over its Silicon Valley Bank unit.

Regulators had asked banks interested in buying SVB and Signature Bank to submit bids by Friday, people familiar with the matter said.

Regulators are considering retaining ownership of securities owned by Signature and SVB to allow smaller banks to participate in auctions for the collapsed lenders, a source familiar with the matter said.

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