A rescue plan for Swiss banking giant Credit Suisse may cause losses to bondholders and even result in the full or partial nationalization of Credit Suisse Group AG, as reported on March 19.
Swiss authorities consider applying losses to Credit Suisse bondholders as part of bank’s ongoing recovery efforts, Reuters learned from two sources. European regulators fear the move could undermine investor confidence in Europe’s financial sector.
Another report from Bloomberg claims that the Swiss government is analyzing a full or partial nationalization of the bank, the only alternative available if the takeover of UBS is not completed. The investment bank UBS is the largest Swiss bank.
Does anyone else remember seeing European bank CDS and bonds quoted the Sunday before? Very surreal!
— Robert Smith (@BondHack) March 19, 2023
March 18. The Swiss National Bank (SNB) and the Swiss financial regulator said the acquisition of Credit Suisse by UBS is the “only option” to prevent a “collapse of confidence” in Credit Suisse.
Nationalization would be an emergency option due to the complexity of the deal and the limited time available. The Swiss authorities are working over the weekend on “emergency measures” expedite the deal before Asian markets open, including allowing the deal to proceed without a shareholder vote.
UBS is reportedly asking the government to pay about $6 billion in legal fees and potential future losses in the event of a takeover. UBS is offering $1 billion for Credit Suisse, a significant discount below the bank’s March 17 market value of nearly $8 billion, according to to the company Market Cap.
Swiss authorities are also worried about job losses due to the trade. According to reports, she was formerly Credit Suisse with respect to lays off 9,000 employees to save his business.
Investment company BlackRock denied March 18. plans or interest in acquiring Credit Suisse. “BlackRock is not involved in any plans to acquire all or any part of Credit Suisse and has no interest in doing so,” the firm said on Twitter.