It’s been a turbulent last few weeks for the banking industry, including Credit Suisse. Many banks solvencies are in question. The Financial Times reported that a potential buyout deal between Credit Suisse and UBS has been made. UBS has been negotiating with Credit Suisse over the weekend concerning the buyout. It seems that a deal has finally been reached. According to reports, UBS will purchase Credit Suisse for over $2 billion.
Credit Suisse & UBS Acquisition Details
Credit Suisse and UBS are two of Switzerland’s largest banks. Those familiar with the matter state that the deal could be signed as soon as Sunday evening. Furthermore, the deal could be priced around only a fraction of what Credit Suisse’s closing price was on Friday. This move is speculated to potentially negatively affect Credit Suisse’s shareholders.
According to reports, UBS also agreed that they would lighten up on the material adverse change clause, or MAC, which typically voids a deal like this if credit default spreads skyrocket. It is said many are upset by the two entities not following normal corporate governance laws, as shareholders are being prevented from voting in this matter.
Swiss National Bank & Finma
It was reported that both lenders have had limited direct contact and that the terms of the agreement were influenced by Finma, a Swiss financial authority, and the Swiss National Bank. Additionally, the US Federal Reserve weighed in and gave their consent to the progression of the buyout.
Regulators have been involved since Wednesday, around the time Credit Suisse asked the Swiss National Bank for an emergency credit line of around $54 billion. It was at that time that the central bank took charge of the merger process.