UBS offers up to $1 billion for Credit Suisse – Economy
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The Swiss authorities on Sunday continued their efforts to rescue the stricken CreditSuisse continued. The negotiations are tough, said a person familiar with the matter. The Financial Times reported that UBS has offered to buy its smaller rival for up to $1 billion. On Friday, the major Swiss bank was still worth around eight billion francs on the stock exchange.
The UBS insisted on a clause that the deal would be void if CDS on its bonds rose 100 basis points or more. The Swiss authorities planned to change the law to avoid a shareholder vote on the transaction, the Financial Times further reported.
The deal between the two biggest banks Switzerland could be signed as early as Sunday evening. The authorities tried to come up with a solution before the stock market started on Monday. But there is no guarantee that the terms will remain the same or that an agreement will be reached, the newspaper said.
A takeover of Credit Suisse by UBS would be subject to a number of conditions. A prerequisite are state guarantees for UBS worth billions, said a person familiar with the matter to the Reuters news agency. One of the insiders said the government guarantees are in the order of around $6 billion. Depending on the terms of the transaction, it could be more or less. The guarantees would cover the cost of winding up parts of Credit Suisse and possible other risks, two people said. If the takeover comes about, 10,000 jobs would have to be cut.
Spokesmen for Credit Suisse, UBS and the Swiss Ministry of Finance declined to comment or could not be reached.
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