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- A sale to UBS could be signed as early as tonight, leaving Credit Suisse worth about $7 billion less than its market value at Friday’s close.
- This comes after Credit Suisse shares posted their worst weekly decline since the coronavirus pandemic began.
- This is despite the announcement that it will receive up to 50 billion Swiss francs ($54 billion) in loans from the Swiss Central Bank.
A customer walks towards an automated teller machine (ATM) inside a bank branch of Credit Suisse Group AG in Geneva, Switzerland, Thursday, September 1, 2022.
Jose Sendon | Bloomberg | Bloomberg | Getty Images
Swiss banking giant UBS on Sunday offered to buy struggling rival Credit Suisse for up to $1 billion, citing four people with direct knowledge of the situation to the Financial Times.
The deal could be signed as early as Sunday night, according to the FT, but Credit Suisse is worth about $7 billion less than its market value at Friday’s close.
The FT said UBS offered to pay for UBS shares at a price of 0.25 Swiss francs ($0.27) per share. Credit Suisse shares closed at CHF 1.86 on Friday. Negotiations are fast-moving and the final terms of the deal may differ from those reported.
Credit Suisse is reportedly reluctant to make the offer, arguing it is too low and would hurt shareholders and employees, people familiar with the matter told Bloomberg.
Credit Suisse and UBS declined to comment on the report when contacted by CNBC.
Credit Suisse shares record their worst weekly drop since the outbreak of the coronavirus pandemic despite the UBS proposal saying it would access up to 50 billion Swiss francs ($54 billion) in loans from the Swiss central bank was done later.
Having already battled a string of losses and scandals, the stock fell last week as sentiment was shaken again by the failure of the Silicon Valley Bank and the shutdown of a signature bank in the United States.
Credit Suisse’s size and potential impact on the global economy is far greater than that of a U.S. bank. The Swiss bank’s balance sheet will be around CHF 530 billion at the end of 2022, about twice as large as Lehman Brothers at the time of bankruptcy. It is also more globally interconnected with multiple international subsidiaries, making it even more important to manage Credit Suisse’s situation in an orderly manner.
Credit Suisse lost about 38% of its deposits in the fourth quarter of 2022 and revealed in its belated annual report earlier this week that the outflow has yet to recover. A net loss for the full year of 2022 was reported at CHF 7.3 billion, with a further “significant” loss expected in 2023.
The bank previously announced a major strategic overhaul to address these chronic issues, with current CEO and Credit Suisse veteran Ulrich Koerner taking over in July.
This is a developing story. Please check the latest information.
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