Is the end of Switzerland’s second largest bank nearing? Swiss authorities have said they have an idea for UBS to take over its longtime rival, which is facing financial problems.
On Thursday, Credit Suisse announced that it will receive a loan of up to 50 billion Swiss francs from the Swiss National Bank, which will improve its liquidity and prevent bankruptcy. Huge problems were caused by the massive drop in stocks at the end of last week. The bank may not be able to withstand a long fall in the value of its shares, and at the same time, failure to rescue it could cause big problems for the entire European banking sector.
UBS made an attempt to absorb a struggling competitor
However, the loan does not solve all the problems of Credit Suisse, whose managers have long effectively covered up deepening financial problems.
Sources say that as early as Sunday, the largest Swiss bank, UBS, offered to buy its competitor for about $1 billion. Credit Suisse had to reject the offer. Because he considered it too low from the point of view of the interests of shareholders and employees.
However, the talks about the merger of the banks did not end there. The proposal appealed to the Swiss authorities, who are aware that a one-time loan will not solve Credit Suise’s problems. The Swiss central bank has pledged to pay up to 108 billion Swiss francs (100 billion euros) for the combined bank and cover USB’s losses from the acquisition of a weakening competitor (meaning 9 billion Swiss francs).
If the merger were to take place, UBS would be close in size to Goldman Sachs or Deutsche Bank.
UBS costs almost 3 times more than Credit Suisse
The American media, in turn, report that in the event of a merger of banks, UBS will be free to decide on the size of employment, and therefore may dismiss some of the acquired employees.
Credit Suisse employs about 50,000 people. employees, including more than 16,000 in Switzerland, and the technology department in India and Poland employs thousands of people.
UBS employs about 74,000 people. people all over the world. Its balance sheet is estimated at $1.1 trillion. and almost double the balance of Credit Suisse.
The collapse of the US bank SVB exposed the problems of other countries
Credit Suisse’s problems would not have appeared last week if not for the collapse of the US bank Silicon Valley Bank. This is a regional bank whose problems did not cause a domino effect, and at the moment analysts are not afraid of a repeat of 2008, when the collapse of Lehman Brothers was considered a symbolic beginning of the global economic crisis. However, the collapse of SVB and the problems of several other US banks led to the disclosure of irregularities in the work of commercial banks in various countries of the world, and the most striking example is Credit Suisse.
Source: Wprost
I am George Brown, author at Daily News Hack. I mostly cover economy news and I have been doing this for quite some time now. I have a lot of experience in this field and I’m always looking for new opportunities to learn more.
