In order to save the major Swiss bank Credit Suisse, the government in Bern met for a crisis meeting in the evening. The largest Swiss bank UBS is demanding state guarantees for a takeover.
How the ailing major Swiss bank Credit Suisse will continue remains uncertain. The Swiss government met for an emergency meeting in the evening, but did not comment afterwards on whether it had reached a decision.
According to reports in the “Financial Times”, a complete or partial takeover of the bank by the largest Swiss bank, UBS, is in the offing. It would be the most significant bank merger in Europe since the financial crisis. So far, the spokesman for the two banks has declined to comment.
Government guarantees required
As the “Financial Times” reported, citing insiders, the supervisory boards of the two largest Swiss credit institutions wanted to meet separately at the weekend to discuss a takeover. The tabloid “Blick” also reports on an extraordinary meeting later today in Bern, at which the government and bank executives would come together.
Reuters reported, citing “two people familiar with the situation”, that Swiss regulators were urging UBS to gobble up its smaller local rival. UBS had previously repeatedly spoken out against a takeover of Credit Suisse – most recently on Tuesday.
According to the Financial Times, a condition for a deal is government security. The government should provide a guarantee for the risks associated with the takeover. The aim is to reach an agreement by Monday morning before the international stock exchanges open.
Banking crisis should be avoided
After scandals and mismanagement, Credit Suisse was already ailing. With the collapse of the US financial institution Silicon Valley Bank (SVB), it got into another downward spiral. The Swiss National Bank then provided the institute with loans of up to CHF 50 billion – the equivalent of almost EUR 51 billion. However, the measure was only able to stop the downward trend in the share price temporarily.
It is the first time since the financial crisis of 2007 that a central bank has felt compelled to provide support for such a large bank. For the central bank, financial regulators and the government, it is now also a question of preventing a general banking crisis. The government in Bern is under enormous pressure to stabilize the situation.
Credit Suisse is one of the 30 global systemically important banks. Their failure would shake the international financial system.