UBS said it was in takeover talks with Credit Suisse amid the turmoil

UBS said it was in takeover talks with Credit Suisse amid the turmoil

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Remark

Switzerland’s largest bank, UBS, is reportedly in talks to acquire its troubled rival Credit Suisse.

Directors of Switzerland’s two largest banks will meet this weekend over plans to merge as early as Saturday night, according to a report from the Financial Times. The discussions are the latest development in more than a week of turmoil and fear about the resilience of the global financial system following the shocking collapse of Silicon Valley Bank and subsequent actions on Wall Street and by regulators to prop up major financial institutions.

Major banking regulators in the United States, Britain and Switzerland are also considering the legal structure of a deal as UBS seeks concessions, including some form of government agreement to cover future legal costs, the Financial Times said. Shares of Credit Suisse rose 7 percent in after-hours trading.

What you need to know about the Credit Suisse crisis and its global impact

Credit Suisse and UBS declined to comment. The Swiss National Bank and the US Federal Reserve did not immediately respond to requests for comment.

Germany’s Deutsche Bank is also looking at whether it could acquire certain Credit Suisse companies, according to a report from Bloomberg News.

An acquisition could allay fears that the turmoil at Credit Suisse and several troubled financial institutions in the United States could trigger a banking contagion similar to what happened during the 2008 financial crisis. Even after actions by governments and financial institutions this week, the stock market remained concerned that the turmoil in the banking sector might not have settled. Still, experts say the financial system appears to be firmly on its feet and stock market volatility is a reflection of news developments rather than a signal of a broader crisis.

The discussions follow a week of chaos for Credit Suisse. On Thursday, the Swiss central bank provided the company with a $53.7 billion liquidity lifeline after the bank revealed “material weaknesses” in its financial reporting.

But Credit Suisse’s underlying problems began well before the recent problems at banks in the United States. Originally serving the ultra-rich, the 167-year-old bank has suffered financial losses, risk and compliance issues, and a critical data breach. Credit Suisse announced in October that it was experiencing significant customer pullbacks and was taking large losses in 2021 due to its exposure to the collapse of New York-based Archegos Capital Management.

The move in Europe follows an announcement Thursday that 11 of the largest banks in the United States would deposit $30 billion into First Republic Bank. The move was intended to support the bank and send a signal about the broader security of the US financial system. Meanwhile, Silicon Valley Bank’s parent company filed for Chapter 11 bankruptcy on Friday.

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