Credit Suisse takeover: UBS is asking the Swiss government to cover about $6 billion in costs if it were to buy Credit Suisse as the two sides raced to hammer together a deal to restore confidence in the ailing Swiss bank.
The 167-year-old Credit Suisse is the biggest name caught in the turmoil caused by the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week. It suffered a rout in banking stocks, prompting authorities to rush out extraordinary measures to keep banks afloat. UBS AG has asked the Swiss government to cover about $6 billion in costs if it were to buy Credit Suisse, according to a Reuters report.
The $6 billion in government guarantees UBS is seeking would cover the cost of winding down parts of Credit Suisse and potential litigation charges, reports said.
Talks are on and all sides are pushing for a quick solution after a week that saw clients pull money and counterparties step back from some dealings with Credit Suisse.
Reports said the goal is for an announcement of a deal between the two banks by Sunday evening.
10,000 job cuts expected
Amidst all this crisis, 10,000 jobs may have to be cut if the two banks combine.
The frenzied weekend negotiations come after a brutal week for banking stocks and efforts in Europe and the US to shore up the sector. US President Joe Biden’s administration moved to backstop consumer deposits while the Swiss central bank lent billions to Credit Suisse to stabilize its shaky balance sheet.
Warren Buffett in contact with Biden team
Berkshire Hathaway’s Warren Buffett has held discussions with senior Biden administration officials about the banking crisis. Buffett had been in touch with the administration in recent days about the regional banking crisis, news reports said on Saturday.
US authorities are involved, working with their Swiss counterparts to help broker a deal, according to a Bloomberg report.
British finance minister Jeremy Hunt and Bank of England Governor Andrew Bailey are also in regular contact this weekend over the fate of Credit Suisse, a source familiar with the matter said. Spokespeople for the British Treasury and the Bank of England’s Prudential Regulation Authority, which oversees lenders, declined to comment.
Credit Suisse shares suffer heavy losses
Credit Suisse shares lost a quarter of their value in the last week. It was forced to tap $54 billion in central bank funding as it tries to recover from a string of scandals that have undermined the confidence of investors and clients.
The company ranks among the world’s largest wealth managers and is considered one of 30 global, systemically important banks whose failure would ripple throughout the entire financial system.
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