In the case of the struggling Credit Suisse, a solution is emerging. However, UBS’s takeover bid is subject to a number of conditions.
Swiss authorities continued their efforts to rescue ailing Credit Suisse on Sunday. The negotiations are tough, said a person familiar with the matter. Meanwhile, the Financial Times reported that UBS has offered to buy its smaller rivals for up to $1 billion.
On Friday, the major Swiss bank was still worth around eight billion francs on the stock exchange. UBS insisted on a clause that the deal would be void if the CDS on its bonds rose by 100 basis points or more.
Authorities want a solution before the stock market starts on Monday
Swiss authorities plan to change the law to avoid a shareholder vote on the deal, the Financial Times reported. The deal between the two largest banks in Switzerland could be signed as early as Sunday evening.
The authorities tried to come up with a solution before the stock market started on Monday. But there is no guarantee that the terms will remain the same or that an agreement will be reached, the newspaper said.
Takeover would probably cost 10,000 jobs
A takeover of Credit Suisse by UBS would be subject to a number of conditions. A prerequisite are state guarantees for UBS worth billions, said a person familiar with the matter on Saturday to the Reuters news agency. One of the insiders said that the state guarantees are in the order of around six billion dollars. Depending on the terms of the transaction, it could be more or less.
The guarantees would cover the cost of winding up parts of Credit Suisse and possible other risks, two people said. If the takeover comes about, 10,000 jobs would have to be cut. Spokesmen for Credit Suisse, UBS and the Swiss Ministry of Finance declined to comment or could not be reached.
The Swiss banking union SBPV called for immediate talks. To this end, the Swiss Bank Staff Association proposes setting up a task force made up of representatives from management and employees. “There is a lot at stake for the approximately 17,000 employees of CS in Switzerland – and therefore also for our economy,” explains the association. “The situation at Credit Suisse has deteriorated further in recent days, and there are signs of a takeover.”