UBS will Take Over Credit Suisse for $3.23 Billion

The deal includes 100 billion Swiss francs ($108 billion) in liquidity assistance for UBS and Credit Suisse.

The official announcement came shortly after the Financial Times reported that UBS Group had agreed to buy Swiss banking giant Credit Suisse after raising its offer to more than $2 billion.

“With the takeover of Credit Suisse by UBS, a solution has been found to ensure financial stability and protect the Swiss economy in this exceptional situation,” the Swiss central bank and other authorities said in a statement.

Earlier on Sunday, the Financial Times reported that UBS Group had agreed to buy Swiss banking giant Credit Suisse after raising its bid to more than $2 billion from less than $1 billion. UBS will now pay more than 0.50 francs ($0.5401) for a Credit Suisse share, well below Credit Suisse’s closing price of 1.86 francs on Friday, the FT reported, citing sources.

Authorities scrambled to save the 167-year-old bank, which is among the world’s largest wealth managers, after the collapse of US banks Silicon Valley Bank and Signature Bank. As one of the top 30 systemically important global banks, any trade for Credit Suisse could ripple through global financial markets.

At least two major banks in Europe are examining contagion scenarios that could spill over into the region’s banking sector and are looking to the Federal Reserve and the European Central Bank to step in with stronger signals of support, two executives who I know the discussions.

A person familiar with the earlier discussions told Reuters that UBS had sought $6 billion in guarantees from the Swiss government as part of a possible takeover of its rival.

A source has previously warned that the talks are running into significant hurdles and that 10,000 jobs could be cut if the two banks combine. The association of bank employees in Switzerland demanded on Sunday the immediate creation of a working group to deal with the risk to jobs.

Swiss media said the government would hold an “important” press conference later Sunday, without giving details.

Credit Suisse shares lost a quarter of their value last week. The bank has been forced to seek $54 billion in central bank funding as it tries to recover from scandals that have undermined investor and customer confidence. Dating back to the mid-19th century, UBS is Switzerland’s largest bank with a market value of 60 billion Swiss francs and is the world’s largest wealth manager. And UBS has had its own tumultuous times, going through several restructurings and cutting thousands of jobs.

Frantic weekend negotiations over the future of Credit Suisse follow a brutal week for banking stocks and efforts in Europe and the United States to prop up the sector after the collapse of US banks Silicon Valley Bank and Signature Bank.

US President Joe Biden’s administration took steps to support consumer deposits, while the Swiss central bank lent $53 billion to Credit Suisse to shore up its balance sheet. UBS has come under pressure from Swiss authorities to take over its local rival to contain the crisis, two people familiar with the matter said.

The plan could see Credit Suisse’s Swiss division spun off, while Bloomberg reported that takeover talks called into question plans to spin off its investment bank under the First Boston brand.