- The sale to UBS, signed this evening, values Credit Suisse about $7 billion less than its market value at Friday’s close.
- It comes after Credit Suisse shares posted their worst weekly decline since the start of the coronavirus pandemic.
- This is despite an announcement that it will borrow up to 50 billion Swiss francs ($54 billion) from the Swiss central bank.
Sep. A customer walks towards an automated teller machine (ATM) inside a Credit Suisse Group AG bank branch in Geneva, Switzerland, Thursday, Jan. 1, 2022.
Jose Sendon | Bloomberg | Good pictures
Swiss banking giant UBS on Sunday offered to buy rival Credit Suisse for up to $1 billion. According to the Financial Timesciting four people with direct knowledge of the situation.
The deal, which the FT said could be signed on Sunday evening, values Credit Suisse at about $7 billion less than its market value at the end of Friday.
The FT said the price per share paid in UBS stock was 0.25 Swiss francs ($0.27). Shares of Credit Suisse closed at 1.86 Swiss francs on Friday. The fast-moving nature of negotiations may mean that the terms of any final agreement may differ from those announced.
Credit Suisse is reportedly rejecting the offer, however, arguing that it is too low and would affect shareholders and employees. People familiar with the matter told Bloomberg.
Credit Suisse declined to comment on the reports when contacted by CNBC.
The UBS offer comes after Credit Suisse shares posted their worst weekly decline since the start of the coronavirus pandemic, despite an announcement that they could borrow up to 50 billion Swiss francs ($54 billion) from the Swiss central bank.
It was already struggling with a series of losses and scandals, and the collapse of Silicon Valley Bank last week and the closing of Signature Bank in the US sent shares tumbling.
Credit Suisse’s size and potential impact on the global economy far exceeds that of American banks. The Swiss bank’s balance sheet is more than double what it was when Lehman Brothers collapsed, at around 530 billion Swiss francs at the end of 2022. It is highly interconnected with many international subsidiaries – making the orderly management of Credit Suisse’s position even more critical.
Credit Suisse lost about 38% of its deposits in the fourth quarter of 2022, and revealed in its delayed annual report earlier last week that outflows had yet to reverse. It reported a full-year net loss of 7.3 billion Swiss francs for 2022 and expects a further “significant” loss in 2023.
The bank previously announced a major strategic shift in an effort to address these chronic issues, with current CEO and Credit Suisse veteran Ulrich Koerner taking over in July.
This is a growing story. Check back for updates.