Swiss banking giant UBS Group has inked a deal to buy out Credit Suisse for roughly $3.2 billion USD on Sunday, the Financial Times reported on Sunday.
Credit Suisse’s board of directors initial billion USD offer on Saturday, according to sources speaking in the report. This led to a subsequent amendment to Switzerland’s regulatory procedures to circumvent shareholders and reveal news of the deal at the weekend.
In it, Swiss National Bank (SNB) will also provide roughly $100 billion USD in liquidity to UBS, with regulators in the United States and the European Union.
In a press release, UBS chairman Colm Kelleher said,
“This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue. We have structured a transaction which will preserve the value left in the business while limiting our downside exposure.”
He added that the acquisition would boost UBS’s “strategy of growing its capital-light businesses” and “bring benefits to clients and create long-term sustainable value” to investors.
UBS chief executive Ralph Harmers added that the acquisition would “further enhance [UBS’s] ability to serve our clients globally” with “best-in-class capabilities.
Harmes continued: “The combination supports our growth ambitions in the Americas and Asia while adding scale to our business in Europe, and we look forward to welcoming our new clients and colleagues across the world in the coming weeks.”
The rescue deal also triggered public outcry from bondholders, who later sued the bank and key executives for allegedly withholding key data on the effects of rising interest rates on investments.
The news comes amid ongoing talks between the two banks after Saudi National Bank refused to increase investments in Credit Suisse over national regulations. This sparked fears over the bank’s profitability and concerns over shareholder financing.
Further issues have surfaced over the last few weeks after the collapse of Silvergate Bank and Silicon Valley bank, sending shockwaves across the global finance industry.
