Key bank regulators in the United States, Britain and Switzerland are also considering the legal structure of a deal, as UBS seeks concessions, including some kind of government settlement to cover future legal costs, according to the Financial Times. Credit Suisse shares rose 7 percent in after-hours trading.
Credit Suisse and UBS declined to comment. The Swiss National Bank and the US Federal Reserve did not immediately respond to requests for comment.
Germany’s Deutsche Bank is also looking at whether it might acquire certain Credit Suisse businesses, according to a Bloomberg News report.
An acquisition could limit fears that the turmoil at Credit Suisse and multiple troubled financial institutions in the United States would create banking contagion, similar to the events of the 2008 financial crisis. Even after the actions of governments and institutions financials this week, the stock market has shown ongoing concern that the tumult in the banking industry has not subsided. However, experts say the financial system appears to be on solid ground and volatility in the stock market may reflect developments rather than a sign of a broader crisis.
The discussions follow a week of chaos for Credit Suisse. On Thursday, Switzerland’s central bank provided the company with a liquidity lifeline of $53.7 billion, after the bank disclosed “material weaknesses” in its financial reports.
But Credit Suisse’s underlying problems began long before the recent troubles at US banks. The 167-year-old bank, which originally served the ultra-rich, has suffered financial losses, risk and compliance issues and a critical data breach. Credit Suisse disclosed in October that it suffered significant client withdrawals and, in 2021, experienced significant losses due to its exposure to the collapse of New York-based Archegos Capital Management.
The moves in Europe follow an announcement on Thursday that 11 of the largest banks in the United States would deposit $30 billion in First Republic Bank. The move was intended to shore up the bank and send a signal about the broader safety of the US financial system. Meanwhile, Silicon Valley Bank’s parent company filed for Chapter 11 bankruptcy on Friday.
