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Regulators may rush to seal a merger between Switzerland’s two largest banks amid turmoil in the industry, the report said. Both the Swiss National Bank (SNB) and the regulator Finma see the takeover by UBS as the only way to get a grip on Credit Suisse’s mounting problems, the Financial Times reports on Saturday, citing anonymous sources involved in the negotiations stand close.
The urgency stems from the fact that investors continue to pull money out of Credit Suisse, which has seen outflows of nearly $11 billion a day for the past week. BlackRock was previously mentioned as another possible candidate but has since denied that it is involved in a takeover. Credit Suisse declined to comment on the report, while UBS did not respond to a request from Barron’s.
Credit Suisse has grappled with a slew of issues over the past few years, ranging from concerns over its financial controls to regulatory investigations, legal setbacks and several quarters of staggering losses that have left investors in doubt as to its survival. But the timetable for a solution has accelerated significantly in recent weeks due to the bankruptcies of banks in the USA, especially the Silicon Valley Bank (SVB).
The closure of SVB sparked global concerns about the industry, prompting many customers to withdraw their funds, putting particular pressure on the shares of weaker banks amid large market swings. Credit Suisse shares are down more than 17 percent in the past five trading days and have lost more than a third of their value so far in 2023. UBS stock was also hit by the sell-off in financials, falling more than 7 percent over the past week.
According to the Financial Times, the talks are now focused on the concessions that UBS intends to make in the event of a deal. The bank wants to be able to phase in all global capital rules and protect itself from ongoing legal costs, which Credit Suisse has already warned about and which could cost them around $2 billion.
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