On Saturday, sources told the Financial Times that the Switzerland-based global investment bank UBS was considering taking over investment bank Credit Suisse after it experienced an outflow of deposits similar to the recent run on the US-based Silicon Valley Bank.
The Financial Times reports that the Swiss government was pressing UBS Group AG, formerly a rival of Credit Suisse, to go through with the takeover and offered assurances against the risks involved in the financial move as the the government feared a collapse of the Swiss bank could impact and destabilize the international financial system.
Under the guidance of Swiss authorities, and with the help of US officials to help broker the deal, UBS and Credit Suisse were working Saturday to finalize the merger.
On Thursday, the Swiss National Bank (SNB) agreed to loan approximately $54 billion to Credit Suisse which acted as a last-minute infusion of liquidity. The move was the equivalent of Credit Suisse taking out a debtor-in-possession loan, indicating the bank's remaining assets would be pledged to SNB.
The bailout from SNB caused Credit Suisse shares to rise as high as 33 percent on Thursday.
The Associated Press reports that on Wednesday Credit Suisse's share had fallen by 30 percent, which worried other European banks that if Credit Suisse collapsed it would have a catastrophic ripple effect across Europe's financial infrastructure. SNB said that Credit Suisse, like other "systemically important banks," met the high criteria for their loan.
In a statement Credit Suisse said, "Credit Suisse announces its intention to access the SNB’s Covered Loan Facility as well as a short-term liquidity facility of up to approximately CHF 50 billion in aggregate. This additional liquidity would support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs."
Credit Suisse's financial difficulties have been equated to the recent collapse of the US banks Silicon Valley Bank and Signature Bank in that the financial institutions' financial woes were brought on by a lack of accounting for risk due to the repercussions of the current high-interest rate financial environment.
