UBS offers to buy Credit Suisse for $1bn

A Porsche travels past the UBS headquarters in Zurich, Switzerland, March 19 2023. Picture: PASCAL MORA/BLOOMBERG

At least two major banks in Europe are examining scenarios of contagion possibly spreading in the region’s banking sector and looking to the Federal Reserve and the European Central Bank to step in with stronger signals of support, two senior executives with knowledge of the discussions said. UBS has also insisted on a “material adverse change” that voids the deal if its credit default spreads jump by 100 basis points or more, the report added. It said there was no guarantee terms will remain the same or that a deal would be reached.

Credit Suisse shares lost a quarter of their value last week. The bank was forced to tap $54bn in central bank funding as it tries to recover from scandals that have undermined the confidence of investors and clients.A final decision on imposing losses on bondholders has not been taken, and the terms could still change, according to sources. Losses imposed on bondholders may need to be larger if Credit Suisse were wound down rather than taken over by UBS, one of the sources said.

The US Federal Deposit Insurance Corp is now leaning towards a break-up of Silicon Valley Bank after failing to line up a buyer for the company, Bloomberg News reported on Sunday citing people familiar with the matter.

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