UBS agrees to buy Credit Suisse for over $2 billion – report

Switzerland’s biggest bank, UBS, agreed to pay more than $2 billion for Credit Suisse in a deal closed on Sunday, according to the business publication. The Financial Times. The newspaper cited anonymous sources familiar with the matter.

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.

Switzerland’s government announced that a press conference would take place on Sunday night at the Bundeshaus in Bern, but did not say when.

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.

kb/msh (Reuters, AFP)