UBS will buy Credit Suisse and the deal will be sealed on Sunday during an extraordinary meeting of the government and executives of the two banking giants in Bern, the generally well-informed tabloid Blick said Saturday.
A merger of the country's two largest banks, one of which is causing growing investor mistrust and a complex case that could normally take months. UBS will have had a few days.
But the Swiss authorities have no choice but to push UBS to overcome its reluctance, due to the enormous pressure exerted by Switzerland's major economic and financial partners who fear for their own financial centre, says Blick.
Bruno Le Maire, the French finance minister, made the message clear in Le Parisien: "We are now waiting for a definitive and structural solution to the problems of this bank."
The U.S. Treasury had also indicated that it was following the case closely.
The Swiss market opens at 08:00 GMT on Monday and a solution will have to be found by then for the bank perceived as a weak link in the sector.
UBS and Credit Suisse signs on a street in Zurich, March 18, 2023 © Fabrice COFFRINI / AFP
At the close of trading on Wednesday after a record fall, Credit Suisse was worth barely 7 billion Swiss francs (about as many euros), a pittance for a bank that is - like UBS - one of the 30 institutions in the world considered too important to let them fail.
But according to the Financial Times and Blick, the bank's customers withdrew 10 billion Swiss francs in deposits in a single day late last week. A tangible sign of distrust of the institution.
According to Bloomberg, UBS requires the public authorities to bear legal costs and potential losses that can amount to billions of francs.
Discussions are stumbling over investment banking, says the financial agency, one of the scenarios under study being a recovery only of asset and wealth management with a sale of the investment bank.
The discussions also focus on the fate of the Swiss branch of Credit Suisse, one of the profitable parts of the group that lost 7.3 billion Swiss francs last year and still expects "substantial" losses in 2023.
This branch brings together retail banking and SME loans. One of the avenues considered by analysts is that of an IPO, which would also avoid massive layoffs in Switzerland due to duplication with UBS's activities.
On Wednesday, the mistrust of investors and partners pushed the Swiss central bank to lend 50 billion Swiss francs to give oxygen to Credit Suisse and reassure the markets. The respite was short-lived, however.
What about the Competition Commission?
Credit Suisse has just experienced two years marked by several scandals that have revealed, by management's own admission, "substantial weaknesses" in its "internal control".
The Swiss Financial Market Supervisory Authority (Finma) accused him of having "seriously failed in his prudential obligations" in the bankruptcy of the financial company Greensill which marked the beginning of his setbacks.
In front of Credit Suisse headquarters in Zurich, March 18, 2023 © Fabrice COFFRINI / AFP
On the other hand, UBS, which spent several years recovering from the shock of the 2008 financial crisis and a massive state bailout, is beginning to reap the fruits of its efforts, and according to several media reports the bank had no intention before the weekend to embark on the Credit Suisse adventure.
The Competition Commission could also raise eyebrows depending on the configuration of the takeover.
At the end of October, Credit Suisse unveiled a major restructuring plan to cut 9,000 jobs by 2025, or more than 17% of its workforce.
The bank, which employed 52,000 people at the end of October, plans to separate the investment bank from the rest of its activities to refocus on its most stable areas, including wealth management.
But as Blick points out: "Everything points to a Swiss solution this Sunday. And when the stock exchange opens on Monday, Credit Suisse could be a thing of the past."
© 2023 AFP