Swiss regulators - the central bank (SNB) and the financial market watchdog (Finma) - have told their American and British colleagues that the UBS takeover is "their plan A" to stop the crisis of confidence at Credit Suisse, the FT wrote, citing an unnamed source with knowledge of the talks.

The Swiss central bank "wants a simple solution before the markets open on Monday," says the business daily, which acknowledges that it is not certain that an agreement can be reached.

UBS wants to assess what risks a full or partial takeover of its rival could pose to its own business, another anonymous source told the FT.

Asked by AFP, the SNB replied that it "does not comment" just like Credit Suisse. UBS and Finma did not immediately respond to requests for comment.

Credit Suisse has been in turmoil for two years, but things accelerated on Wednesday when investors - shaken by the bankruptcy of the Silicon Valley Bank in the United States - massively sold the shares of the second Swiss bank.

Credit Suisse is considered a weak link in the banking sector since a series of scandals and a restructuring plan that is struggling to convince.

At the end of Wednesday, the Zurich bank's market capitalization was less than 7 billion Swiss francs, a paltry sum for one of the 30 banks in the world considered too large to fail.

On Wednesday evening, after remaining silent all day, the Swiss central bank provided verbal support and offered liquidity.

On the night of Wednesday to Thursday, Credit Suisse borrowed 53 billion Swiss francs to give itself a balloon of oxygen and move forward with its restructuring.

For the SNB, this was to reassure markets around the world.

It worked for a while, but the stock fell more than 8% on Friday.

This bank, founded in 1865, which was a key player in the Swiss economic miracle, is now worth only 8 billion and a few Swiss francs on the stock market, while UBS is worth 56.6 billion.

Common hypothesis

the hypothesis of a takeover of Credit Suisse by a bank had also been mentioned by analysts at J.P Morgan this week, "with UBS as a potential option".

Given the weight that this combination would give to the two banks, they imagine that the Swiss branch of Credit Suisse, which combines retail banking and SME loans, could be listed on the stock exchange or split.

With its stock collapsing, which hit an all-time low of 1.55 Swiss francs on Wednesday, Credit Suisse's market capitalization has plummeted, potentially making the bank easy prey to absorb.

The idea of a merger of the two largest Swiss banks resurfaces regularly, but is generally dismissed because of competition issues and risks to the stability of the Swiss financial system given the weight that a merger would give them.

As for UBS, it has spent several years recovering from its severe crisis in 2008, and it is not clear whether it wants to embark on a new restructuring now that it is beginning to reap the fruits of its efforts.

© 2023 AFP