UBS Group doubled its initial offer and agreed to buy rival Credit Suisse for nearly $2 billion on March 19 in a historic deal for Switzerland’s two biggest banks, the Financial Times reported. reported.
UBS had previously put a $1 billion offer on the table on March 18, but the deal was rejected by Credit Suisse’s board, sources told the FT. The $1 billion offer was a significant discount to the bank’s March 17 market value of nearly $8 billion, according to on data from Companies Market Cap.
To seal the deal, Swiss authorities also agreed to change the country’s regulations to bypass a shareholder vote and announce the deal over the weekend, before markets opened.
As part of the transaction, the Swiss National Bank (SNB) has also committed to providing USB with over $100 billion in liquidity facilities. According to the FT, the trade was heavily influenced by the SNB and the Swiss Financial Market Supervisory Authority (FINMA). United States and European regulators are said to have approved the deal and coordinated statements will be released later on Sunday.
UBS takes over Credit Suisse pic.twitter.com/XF8LEZFXlx
— David Gura (@davidgura) March 19, 2023
Swiss authorities considered alternatives to Credit Suisse in case the deal with UBS falls through over the weekend, including full or partial nationalization of the bank as an emergency option.
Credit Suisse’s rescue plan would also include losses for bondholders. The move raised concerns from the European regulator that it would undermine investor confidence in Europe’s financial sector.
UBS and Credit Suisse have been in talks with regulators since March 15 after Credit Suisse’s largest shareholder, Saudi National Bank, said in an interview that it would not increase its investment in the Swiss bank because of the regulations. Worries about the bank’s profitability were compounded by comments that raised concerns about possible shareholder financing.
Credit Suisse was founded in 1856 to finance the expansion of Swiss railways. It was considered the second largest bank in the country.
