Credit Suisse agrees to CHF3bn takeover by rival Swiss bank UBS

© Keystone / Michael Buholzer

Ailing Swiss bank Credit Suisse will be taken over by its rival UBS after a frantic last-ditch deal to prevent a catastrophic banking collapse.

A weekend of high drama ended with UBS agreeing to buy Credit Suisse for CHF3 billion ($3.2 billion). This values Credit Suisse at CHF0.76 per share, well below its CHF1.86 closing price on Friday.

The Swiss National Bank (SNB) will smooth the transaction by providing CHF100 billion in liquidity to UBS and Credit Suisse during the takeover. The government has agreed to absorb up to CHF9 billion of potential UBS losses.

The collapse of the ‘too big to fail’ Credit Suisse would have caused “irreparable economic turmoil” in Switzerland and around the world, said Swiss Finance Minister Karin Keller-Sutter. The takeover has “laid the foundations for greater stability”.

“This is a commercial solution, not a bailout,” she added.

Credit Suisse chair Axel Lehmann called the takeover a “historic, sad and challenging” event. The combined entity will be led by current UBS CEO Ralph Hamers and chair Colm Kelleher.

The Swiss government pushed through the takeover by controversially sidelining major Credit Suisse shareholders, including the Saudi National Bank and the Qatar Investment Authority, which pumped billions into the bank last year.

Weekend negotiations took place between Credit Suisse, UBS, the Swiss government, central bank and the financial regulator.

The financial authorities of other countries were also involved in the process as their blessing was needed to seal any deal.

Catalogue of problems

The rushed takeover follows a week of mounting woes for Credit Suisse that led to fears that Switzerland’s second largest bank would go bust.

Bank collapses in the United States sent Credit Suisse into freefall during the course of the week. Clients withdrew billions of francs every day, according to media reports.

The SNB provided emergency liquidity to stave off a full-blown bank run and Credit Suisse said it would borrow up to CHF50 billion from the central bank.

But the SNB’s backstop funding offer was not enough to convince depositors and investors, forcing the authorities to take further measures.

Credit Suisse has endured a disastrous few years, culminating in a CHF7.3 billion loss in 2022. That same year, the bank said it would shed 9,000 jobs in an attempt to revive its fortunes.