Major Swiss bank in trouble: Credit Suisse comes to an end

DCrisis-ridden Credit Suisse (CS) could end up in the hands of its local rival UBS in Zurich and lose its independence after 167 years. As confirmed in well-informed circles, talks are underway for UBS to acquire CS. If possible, they should be completed by Sunday evening, but they may fail.

The talks involve the Swiss National Bank (SNB) and the Swiss Financial Market Supervisory Authority (Finma), as well as the Swiss government, which held crisis meetings on Saturday night and Sunday morning. Since then, there have been no comments from the government; all the other members were also silent over the weekend.

Clients probably withdrew a lot of money

On Thursday, it still looked as if the SNB would bring some solace to the turmoil surrounding the scandal-ridden, loss-making big bank with its CHF50bn liquidity injection. But on Friday, the badly battered CS share price on the exchange collapsed again. Risk premiums on CS bonds also remained at record highs, suggesting that market doubts remain about the bank’s future viability.

Apparently, unsettled clients continued to withdraw funds en masse. Regulators are the driving force behind takeover. They fear that the “bank run” and the subsequent collapse of Credit Suisse could not only seriously hurt the Swiss financial center, but also fuel the already tense situation in the banking sector due to the collapse of Silicon Valley. A bank can undermine the international financial system. .

As a systemically important bank with total assets of CHF 531 billion and a strong investment banking presence, CS maintains business relationships with financial institutions around the world. At the end of last week, some of them apparently already put forward an internal slogan to stop doing business with the Swiss.

Lots of work for UBS

UBS maintained to the very end that it was not interested in taking over its defeated competitor. And with good reason: UBS is doing well; she is solid. If Credit Suisse were to be integrated, it would take a huge amount of work for years to come. The harmonization of IT systems alone is a Herculean task, not to mention the different company cultures that have always been highly competitive.

Takeovers also entail huge financial risks. After all, after a series of self-made scandals that can be attributed to inadequate risk management, CS is embroiled in numerous legal disputes that could result in billions of dollars in expenses.

Billions of aid from the state?

Against this background, negotiations are underway not only about the price at which a takeover offer could be made to Credit Suisse shareholders. CS was worth 7.4 billion Swiss francs on the stock exchange on Friday. However, it is common for shareholders to be offered an additional fee in the event of a takeover so that they can also produce their share certificates.