Financial regulators of Switzerland consider various options for the “emergency rescue” of Credit Suisse and are even ready to neglect the established rules.
The Swiss National Bank (SNB) and the Swiss Financial Market Supervisory Authority (FINMA) are applying “emergency measures” to avert a “collapse in confidence” in Credit Suisse and eliminate the risk of destabilizing the country’s financial market. To this end, a fast-track takeover of Credit Suisse by UBS is being prepared. The deal is scheduled to be completed before “markets open on Monday.” This is reported by the Financial Times, citing its own sources.
More specifically, financial regulators are taking emergency measures to allow the transaction to proceed without a shareholder vote, ignoring existing rules requiring a six-week “consultation on the acquisition” with the bank’s shareholders. Such a “rescue plan” for Credit Suisse could bring financial losses to its bondholders. Reuters reports that Swiss authorities are considering compensation for financial losses, fearing that investors’ confidence in Europe’s financial sector will be undermined.
In case the takeover by UBS won’t be completed, the only available alternative is the full or partial nationalization of Credit Suisse Group AG. The Swiss government considers such a scenario, Bloomberg reports.
UPD: President of Switzerland Alain Berset, in the presence of executives of both banks and the chairman of the Swiss National Bank, declared about reaching an agreement to buy Credit Suisse by UBS for $3.25 billion, MarketWatch reports. The deal was approved by the Federal Department of Finance of Switzerland (EFD) and FINMA. Besides, according to Bloomberg, the Swiss National Bank pledged to provide UBS with more than $100 billion in liquidity within the deal.
For reference: Credit Suisse is the second-largest bank in Switzerland, having $575 billion worth of assets under management. UBS is in first place with $1.1 trillion worth of assets on its balance sheet. The merger of these two banks will create one of Europe’s largest systemically important financial institutions.
Recall that the situation around Credit Suisse was affected by the destabilization of the American banking sector, the active phase of which began after the closing of Silicon Valley Bank by the regulators. Moreover, the situation in the U.S. banking sector continues to deteriorate. According to analysts, almost 190 banks in the country can become insolvent.
