< /p> Credit Suisse bank logo in Zurich on March 18, 2023.
Bern/Zurich/Washington – In Switzerland, the rescue of the second largest Swiss bank, Credit Suisse, continues. Its fate is in the hands of only a handful of people, among them politicians, economists and mathematicians, who assess whether the once prestigious bank has any chance of getting out of trouble on its own. It got into them because of the wrong decisions of the past and especially because of the loss of confidence that culminated this week and which started a massive outflow of client deposits.
This weekend, extraordinary negotiations are taking place in Switzerland, which will most likely end with an agreement on the breakup of Credit Suisse Group AG – a financial institution that was founded 167 years ago. As Bloomberg wrote, it is about the “dramatic fall of a titan of the all-powerful Swiss banking industry”. The government and regulators are discussing a proposal for the bank, or at least parts of it, to be taken over by its arch-rival, Switzerland's biggest bank UBS.
The negotiations are mainly about the conditions under which UBS will be willing to save the bank in trouble. The government is keen to ensure that the crisis of confidence does not spread to the entire banking sector on which Switzerland depends. According to Reuters sources, UBS is asking the government to guarantee an amount of approximately six billion dollars (CZK 135 billion) for the costs that UBS anticipates in this connection. It mainly concerns the termination of the activities of some parts of Credit Suisse and then also the legal disputes that UBS expects.
Swiss regulators are trying to come up with a solution for Credit Suisse before trading on exchanges in Asia opens on Monday morning. There are fears that if the matter is not resolved even then, jitters will reign in the markets and the major stock indexes will weaken sharply. This would mean economic losses for individuals, companies and governments.
Credit Suisse's years-old problems are escalating at a time when some banks in the United States have run into trouble. The administration of US President Joe Biden has decided that all depositors will get their deposits back from the US financial institutions Silicon Valley Bank (SVB) and Signature Bank beyond the statutory insurance. The Swiss central bank also decided to take decisive action, making 50 billion francs (CHF; 1.2 trillion CZK) available to the financial institution Credit Suisse to immediately boost liquidity.
Credit Suisse is one of the largest asset managers in the world. and is considered one of the thirty systemically important banks in the global financial architecture. For that reason, the negotiations in Switzerland are also closely watched by regulators in Britain, Germany, the United States and other major countries.
UBS wants guarantees of six billion dollars if it buys Credit Suisse
< p>The Swiss bank UBS is asking the government of the Alpine country for guarantees in the amount of about six billion dollars (135 billion CZK) if it were to buy Credit Suisse, which has run into problems. Reuters reported this today, citing a person familiar with the negotiations. One of the sources also pointed out that 10,000 jobs may have to be cut if the two largest Swiss banks merge.
According to UBS, government guarantees should cover the costs of liquidating parts of Credit Suisse and any legal disputes.
According to the Financial Times (FT), the Swiss National Bank wants to find an uncomplicated solution to the current situation before the markets open on Monday. If the banks merge, it would be the largest banking merger in Europe since the financial crisis of 2008.
Credit Suisse announced this week that it will use the option to borrow up to 50 billion Swiss francs (1.2 trillion CZK) from the Swiss central bank to boost liquidity. According to a Reuters analysis, however, this is only buying time and, for example, the American investment bank JPMorgan considers a takeover by UBS to be the most likely scenario. over the past two years, it has identified serious deficiencies.
The financial markets have also been under tension in recent days due to the collapse of the American financial institutions Silicon Valley Bank (SVB) and Signature Bank. The development prompted US President Joe Biden to call on Congress on Friday to allow regulators to crack down on executives at failed banks. He also expressed his belief that the banking crisis has calmed down.
However, according to Reuters, concerns about broader problems in the banking sector remain. On Saturday, high-ranking representatives of the Biden administration also discussed the situation with well-known investor and billionaire Warren Buffett, the agency said.
First Citizens BancShares is considering a bid for the bankrupt bank SVB
American bank holding company First Citizens BancShares is considering making an offer to buy the bankrupt Silicon Valley Bank (SVB). This is reported today by the Bloomberg agency, according to which there is one more serious candidate in the game.
Offers for the takeover of the bank, over which the American Federal Deposit Insurance Corporation (FDIC) has control after the collapse, are to be submitted by today morning local time (afternoon CET). Based on them, the FDIC will decide whether to go the route of selling the entire financial company or dividing it into parts.
American authorities closed SVB last week. It was the largest bank failure in the US since the height of the financial crisis in 2008. Last weekend, the US authorities also took control of the Signature Bank financial institution, which raised concerns on the financial markets about the future development of the banking sector.
SVB lent money mainly to start-up technology companies, so-called start-ups. She estimated the value of assets and liabilities at up to ten billion dollars, liquidity at around USD 2.2 billion. At the end of last year, it had assets worth 209 billion dollars.