On Friday evening, the Financial Times claimed, with several anonymous sources in support, that UBS - the number one in the sector in Switzerland - is in talks for the total or partial purchase of its rival, with the express blessing of the Swiss regulatory authorities.

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.

Neither Credit Suisse nor the SNB would comment to AFP. UBS and the Swiss financial market watchdog (Finma) did not immediately respond to requests for comment.

Credit Suisse is certainly not expensive. After a black week on the stock market that forced the central bank to lend 50 billion Swiss francs (50.4 billion euros) to give air to the Zurich institution and reassure the markets, it was worth only 8 billion Swiss francs (8.1 billion euros) on the stock market at the close on Friday evening.

But an acquisition of this size is of a formidable complexity, especially in an emergency.

And despite the two regulators saying at the height of the storm that "Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks", the soaring prices of hedging instruments for the bank, credit default swaps (CDS), is a sign of a lack of confidence.

Redemption but of what?

Credit Suisse has just experienced two years marked by several scandals, which revealed by management's own admission "substantial weaknesses" in its "internal control". Finma had accused him of having "seriously breached his prudential obligations" in the bankruptcy of the financial company Greensill, which marked the beginning of the black series.

In 2022, the bank suffered a net loss of 7.3 billion Swiss francs, amid massive withdrawals of money from its customers. It still expects a "substantial" pre-tax loss this year.

The logo of the Swiss bank UBS on the Opera Tower in Frankfurt, Germany, February 7, 2023 © Daniel ROLAND / AFP/Archives

"This is a bank that never seems to be able to put its house in order," IG analyst Chris Beauchamp said in a market comment this week.

As for UBS, it spent several years recovering from flirting with the catastrope during the 2008 crisis. And it's not clear that it wants to embark on a new restructuring now that it is beginning to reap the fruits of its efforts.

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 of a union, analysts believe that Credit Suisse's Swiss arm, which includes retail banking and SME loans, could be floated on the stock exchange or split.

It would also be a way to avoid mass redundancies of employees in Switzerland because of the inevitable duplication of activities.

Only fund and wealth management could then be sold to UBS or another contender, the FT said.

Banks crucial to the global © financial system Jonathan WALTER / AFP

Another obstacle to a merger is the Competition Commission, says former Finma boss Eugene Haltiner in an interview with CH Media Group. "Comco would undoubtedly see significant obstacles because both institutions have a dominant position in the market," he said.

Faster, stronger

With the help of the central bank on Wednesday, Credit Suisse has gained "precious time", say analysts at Morningstar, judging, however, that its restructuring was "too complex" and did not go "far enough" to reassure lenders, customers and shareholders.

Among other things, they suggest that Credit Suisse sell its brokerage business, which is losing money.

Analysts at US bank J.P. Morgan are considering a radical option that would be to simply "shut down completely" the investment banking business.

At the end of October, Credit Suisse unveiled a vast restructuring plan that includes the elimination of 9,000 jobs by 2025, or more than 17% of its workforce.

The bank, which employed 52,000 people at the end of October, intends to refocus on its most stable activities and radically transform its investment bank.

Much of the investment bank's business, which has suffered heavy losses, is to be grouped under the First Boston brand, named after an American investment bank that Credit Suisse absorbed in 1990, and then gradually outsourced.

© 2023 AFP