UBS and Swiss National Bank agree to acquire Credit Suisse
The Swiss National Bank said at a press conference in Bern late on Sunday that UBS will take control of Credit Suisse.
Swiss President Alain Berset said the Swiss Federal Council welcomed the takeover.
Berset said the acquisition was the “best solution” to restore and strengthen market confidence in Credit Suisse and the Swiss financial centre.
Government and banking officials were engaged in urgent talks to rescue the distressed creditor, who received a $54 billion (€50 billion) bailout from the country’s central bank this week.
According to an earlier report by business publication The Financial Times, UBS agreed to pay around $2 billion for Credit Suisse in the deal reached on Sunday. The newspaper cited anonymous sources familiar with the matter.
Swiss Finance Minister Karin Keller-Sutter told the press conference that the Berne government had agreed to provide guarantees of up to CHF 9 billion to underwrite the takeover. But Keller-Sutter said those guarantees would only apply to a “very specific portfolio, which UBS is taking over now”.
She also said that the guarantees would only start to apply if UBS’s acquisition-related losses exceeded 5 billion francs.
Offer only a quarter of the par value of the shares
Previously, there were reports that UBS had offered to buy the bank for up to $1 billion, but Credit Suisse reportedly turned down the offer.
Swiss media and the Reuters news agency also reported that UBS is also seeking $6 billion in Swiss government guarantees as part of a possible takeover of its rival, citing a person with knowledge of the talks. The guarantees would cover the cost of liquidating parts of Credit Suisse and possible litigation charges.
The Financial Times said UBS would pay 50 Swiss francs (about 54 cents or 50 euros) per Credit Suisse share, well below Friday’s closing price of 1.86 francs. That would make the bank’s value by market capitalization around $7 billion, whereas a year ago Credit Suisse was valued at around $25 billion by shareholders.
The publication reported that Swiss authorities were planning to change laws so that the shareholder vote for the transaction could be ignored, with investors highly unlikely to be satisfied with the compensation.
The purpose of such a move would be to ensure that the transaction is completed before markets open on Monday, at which point the stock could, in theory, renew its freefall.
Source: DW
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