The Swiss National Bank and Swiss regulator Finma have told their international counterparts that they regard a merger deal with UBS as the only option to arrest a collapse in confidence in Credit Suisse, the Financial Times reported on Saturday (Mar 18).
UBS, Credit Suisse and key regulators are rushing to finalise a deal on the merger of the two Swiss banks, the newspaper added.
Bloomberg also reported on Saturday that UBS has asked the Swiss government for a backstop to cover future risks should it buy Credit Suisse.
UBS is discussing scenarios in which the Swiss government would take on certain legal costs or other specific losses in any deal, the report said, citing people with knowledge of the matter.
Under one likely scenario, the deal would involve UBS acquiring Credit Suisse to obtain its wealth and asset management units, while possibly divesting the investment banking division.
Credit Suisse began a make-or-break weekend after some rivals grew cautious in their dealings with the bank as regulators urged it to pursue a deal with Swiss rival UBS.
Credit Suisse Chief Financial Officer Dixit Joshi and his teams will hold meetings over the weekend to assess strategic scenarios for the bank, people with knowledge of the matter said on Friday.
The 167-year-old bank is the biggest name ensnared in market turmoil unleashed by the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week, forcing the Swiss bank to tap US$54 billion in central bank funding.
Swiss regulators are encouraging UBS and Credit Suisse to merge but neither bank wanted to do so, one source said. The regulators do not have the power to force the merger, the person said.
The boards of UBS and Credit Suisse were expected to separately meet over the weekend, the Financial Times said.
Credit Suisse shares jumped 9 per cent in after-market trading following the FT report. Credit Suisse and UBS declined to comment.
In the latest sign of its mounting troubles, at least four major banks, including Societe Generale SA and Deutsche Bank AG, have put restrictions on their trades involving Credit Suisse or its securities, five people with direct knowledge of the matter told Reuters.
“The Swiss central bank stepping in was a necessary step to calm the flames, but it might not be sufficient to restore confidence in Credit Suisse, so there’s talk about more measures,” said Frederique Carrier, head of investment strategy at RBC Wealth Management.