Banks: negotiations for a forced marriage between UBS and Credit Suisse

Weekend of crisis at the height of Swiss political power and in the management rooms of the two Swiss banking giants, which are among the thirty banking establishments “systemic”, considered essential to the good health of the international financial system. According to information from Financial Times, Saturday, March 18, intense negotiations are underway for UBS to take over all or part of its rival Credit Suisse.

The latter is on the verge of leaving the road after a grueling week which first saw it record the largest decline in its share price (-24.24% on Wednesday March 15, reaching an all-time low), before that an emergency rescue of 50 billion Swiss francs from the Swiss National Bank (SNB), i.e. the equivalent in euros, in the form of a credit line to deal with a liquidity crisis, only partially produces its effects . Barely calmed down in the hours following the announcement of this breath of fresh air, the markets have indeed resumed their downward spiral, reviving the hypothesis of a generalized contagion to the entire European banking sector next week.

It is under the specter of what would be perceived abroad as a real disaster for the Swiss financial center, long praised for its irreproachable stability, that the boards of directors of the two largest Swiss banking institutions are meeting separately this week. -end to discuss what would become the biggest bank merger in Europe since the 2008 financial crisis.

The quest for a “legible” agreement

The Swiss National Bank (SNB) and Finma, the Swiss financial market authority, are leading the negotiations, while for its part, the Federal Council (government) of Bern is also in a crisis session on the subject. None of the parties involved communicate, with the well-understood aim of avoiding any misinterpretation of the discussions in progress. The objective seems to be to obtain an agreement in the snatch before the markets reopen on Monday.

“We urgently need a simple and straightforward solution “, says Reto Schiltknecht of the Zurich consulting firm Geissbühler Weber & Partner, quoted by the Neue Zürcher Zeitung. A senior civil servant at Finma for a long time, he was notably responsible for the file “too big to fail” – these financial establishments that the State cannot abandon to their fate, because of their size and their imbrication in the financial system and the national economy. He participated in the implementation of a rescue plan for the big banks.

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