In Switzerland, banks, authorities and government officials are discussing the rescue of the ailing central bank Credit Suisse under super-high time pressure. All sides seek a takeover of Credit Suisse by USB before the stock exchanges open on Monday. However, Credit Suisse has now apparently rejected an offer from USB.
UBS had previously offered to buy Credit Suisse for up to $1 billion, according to the Financial Times (FT). According to the report, the Swiss government planned to change the country’s laws to avoid a shareholder vote on the deal. However, the Bloomberg news agency reported a short time later that Credit Suisse was resisting the offer with the support of its largest shareholder.
According to the Financial Times, the proposed share swap between the two banks in Switzerland was expected to be signed as early as Sunday evening. But the price for the deal would have been a fraction of Credit Suisse‘s closing price on Friday.
According to insiders, the major Swiss bank UBS demands extensive state guarantees for the possible emergency takeover of the heavily troubled Credit Suisse. It is about an order of magnitude of about six billion dollars, said a person familiar with the matter on Saturday. However, higher or lower amounts are possible depending on the terms of the deal, he said. The Swiss government also met in Bern on Saturday for a special session.
The guarantees claimed by UBS would cover the costs of winding down parts of Credit Suisse and possible unknown risks, two people familiar with the matter said. A takeover is intended to dispel the crisis of confidence surrounding crisis-ridden Credit Suisse.
Swiss regulators are trying to find a solution for Credit Suisse before the market launch on Monday. Negotiations have been tough recently, according to one of the insiders. Several issues have not yet been resolved, he said. For example, opinions differed on what should happen to Credit Suisse‘s investment bank. Another stumbling block is the reduction in staff. Around 10,000 jobs are at stake, most of which are likely to go to Credit Suisse employees.
A possible alternative to UBS‘s takeover is the Swiss state’s entry. Spokesmen for Credit Suisse, UBS and the Swiss Finance Ministry declined to comment.
One of the people said Deutsche Bank is also interested in acquiring parts of Credit Suisse. However, an agreement with the German financial institution could take longer. A spokesman for the German institute declined to comment. The agency “Bloomberg” had previously reported that Deutsche Bank was interested.