UBS is bidding to buy Credit Suisse for $3.23 billion
Deal announced before the opening of world markets to reassure them
Monday – 28 Shaaban 1444 AH – 20 March 2023 AD Issue number [
Officials of “Kurdi Suisse” and “UPS” in a press conference yesterday (Reuters)
London: «Asharq Al-Awsat»
Before the markets reopened, today (Monday), the Swiss bank “UBS” made an offer to buy its smaller competitor, “Credit Suisse”, at a value of $ 3.23 billion. Officials of the Swiss Central Bank said in a press conference in the Swiss capital, Bern, yesterday (Sunday), that it will provide large liquidity to the two banks if they merge, adding that the deal represents a solution to achieve financial stability and protect the Swiss economy in an exceptional situation.
The agreement capped days of arduous negotiations led by the Swiss authorities to save Credit Suisse, the bank that was founded 167 years ago and is among the largest wealth managers in the world. The financial sector hopes that this deal will succeed in restoring calm to the Swiss banking sector and reassuring the global markets, after a harsh week that witnessed the second and third largest banking collapse in the history of the United States.
Yesterday (Sunday), the “Financial Times” quoted sources as saying that the Swiss “central bank” had agreed to provide liquidity worth $ 100 billion to “Credit Suisse”.
UBS had made an offer to buy the bank by about a billion dollars, but it was not well received by the Swiss authorities, who are racing against time to contain the crisis before the markets open today (Monday), for fear of customers rushing to withdraw from banks, and random sales in stock exchanges.
The acquisition of “UBS” is seen as an “emergency and urgent offer”, with the support of the Swiss government authorities that are coordinating at the highest level with the banking regulators in the United States of America, to contain the repercussions of the major collapse of “Credit Suisse” stocks and bonds, during the past week. , following the collapse of smaller US banks.
Shares of Credit Suisse lost a quarter of their value last week. The bank was forced to tap $54 billion in Central Bank financing as it tries to recover from scandals that have undermined investor and customer confidence in it.
Yesterday, Reuters quoted sources as saying that the Swiss authorities are considering loading the holders of Credit Suisse bonds with losses as part of a rescue package, while regulators in Europe fear that such a move would affect investor confidence elsewhere in the financial sector. European.
Founded 167 years ago, Credit Suisse is among the largest wealth managers in the world. As one of the 30 most important banks in the world in terms of regulation, any transaction involving Credit Suisse will affect the global financial markets.
And “Bloomberg” quoted informed sources as saying that the “Credit Suisse” bank rejected an offer of up to one billion dollars, as it was very low, and it would harm shareholders and employees from the deferred shareholders. If the takeover collapses, Switzerland is considering taking over the bank entirely or owning a large stake.
An informed source told Reuters earlier that UBS had requested $6 billion from the Swiss government as part of a possible deal to buy Credit Suisse, covering the cost of liquidating parts of Credit Suisse and potential litigation fees. .
There are many complexities in the UBS acquisition, including thorny issues such as government subsidies that would cover potential legal and other losses.
And the Swiss “Credit Suisse” bank intends to write off 9 thousand jobs, and the agency “Bloomberg” stated that this is just the beginning, while some estimate that the final outcome of writing off jobs could be many times this number.
Together, the two banks employed around 125,000 people at the end of last year, with 30 percent of them employed in Switzerland.
High interest rates have caused banks to stumble in the United States and Europe, at a time when some expect to continue raising interest rates to control inflation.
However, Lloyd Blankfein, former CEO of Goldman Sachs, said yesterday that the Federal Reserve (the US central bank) could stop raising interest rates this week, given that the banking crisis will lead to a tightening of lending standards in the economy.
Blankfein added, in an interview with a television program, yesterday, that the increased scrutiny in the wake of the collapse of the banks “Silicon Valley Bank” and “Signature Bank” will lead to banks providing less credit on deposits, indicating that for this reason the market expects an opportunity of a greater percentage of 70 percent expect the Federal Reserve to raise interest rates by 25 basis points at its scheduled meeting this week.