Crunch time for Credit Suisse talks as UBS seeks Swiss assurances

UBS has asked the Swiss government for $6 billion to cover the cost of a possible Credit Suisse acquisition, according to people familiar with the matter.

Authorities rush to resolve the crisis of confidence in the 167-year-old Credit Suisse. Credit Suisse is the most globally important bank embroiled in turmoil fueled by the bankruptcies of US lenders Silicon Valley Bank and Signature Bank over the past week.

Regulators want a solution before markets reopen on Monday, but one source said talks face serious obstacles and could cut 10,000 jobs if the two banks were to merge. I warn you that you may have to.

The guarantees UBS is seeking will cover the costs of closing parts of Credit Suisse and potential litigation costs, two people told Reuters.

Credit Suisse, UBS and the Swiss government declined to comment.

A frenetic weekend of negotiations follows a brutal week for bank stocks and efforts in Europe and the US to strengthen the sector. The Joe Biden administration in the United States made moves to protect consumer deposits, but the Swiss central bank lent billions of dollars to Credit Suisse to stabilize its volatile balance sheet.

UBS was under pressure from Swiss authorities to buy out a local rival to end the crisis, according to two people familiar with the matter. Under this plan, Credit Suisse’s Swiss business may be spun off.

The Financial Times reported, citing two people familiar with the matter, that Switzerland was preparing to take emergency measures to expedite the deal.

Bloomberg News reported, citing people familiar with the matter, that U.S. authorities were involved and were working with Swiss authorities to help broker the deal.

Berkshire Hathaway’s Warren Buffett has discussed the banking crisis with senior Biden administration officials, a source told Reuters.

The White House and the U.S. Treasury Department declined to comment.

UK Finance Minister Jeremy Hunt and Bank of England Governor Andrew Bailey are also in regular contact this weekend over the whereabouts of Credit Suisse, sources familiar with the matter said. Spokesmen for the UK Treasury and the Bank of England’s prudential regulator, which oversees lenders, declined to comment.

Credit Suisse shares lost a quarter of their value last week. The bank has been forced to tap $54 billion in central bank funding as it seeks to recover from a series of scandals that have eroded investor and customer confidence.

It is one of the world’s largest wealth managers and is considered one of the world’s 30 systemically important banks.

There have been multiple reports of interest in Credit Suisse from other rivals. Bloomberg reported that Deutsche Bank was considering buying some of its assets, but U.S. financial giant BlackRock denied reports it was participating in a rival bid for Deutsche Bank.

How the relentless rate hike campaign by the US Federal Reserve and other central banks (including Thursday’s European Central Bank) is putting pressure on the banking sector following the collapse of California-based Silicon Valley Bank was focused on.

The SVB and Signature failures are the largest bank failures in U.S. history, behind the collapse of Washington Mutual during the 2008 global financial crisis.

Bloomberg News reported on Saturday that First Citizens Bankshares is considering an offer for SVB, with at least one other suitor seriously considering the offer.

Bank stocks have taken a beating around the world since the SVB collapsed, with the S&P Bank Index down 22%, its biggest two-week loss since the pandemic rocked markets in March 2020.

A major U.S. bank put a $30 billion lifeline into small lender First Republic. US banks have asked the Federal Reserve for his record $153 billion in emergency liquidity in recent days.

The coalition of midsize banks has asked regulators to cover all deposits with federal insurance for the next two years, Bloomberg News reported Saturday, citing a letter from the coalition.

In Washington, the focus has shifted to increased oversight to ensure banks and their executives are held accountable.

Mr. Biden called on Congress to give regulators greater powers over the sector, including raising fines, recovering funds and barring officials from failed banks.

A quick and dramatic event could mean big banks getting bigger, smaller ones straining to catch up, and more local lenders shutting down.

“People are really moving money,” said Keith Noreika, vice president of Patmac Global Partners and former Republican U.S. currency supervisor. will look quite different.