Swiss authorities agreed to change the country’s regulations to bypass a shareholder vote and announce the deal over the weekend.
UBS Group doubled its initial offer and agreed to buy its competitor Credit Suisse for nearly $2 billion on March 19, in a historical deal for the two biggest banks in Switzerland, the Financial Times reported.
UBS previously put a $1 billion offer on the table on March 18, but the deal was rejected by the Credit Suisse board, FT sources said. The $1 billion offer was a considerable discount under the bank’s market value on March 17 of nearly $8 billion, according to data from Companies Market Cap.
To close the deal, Swiss authorities also agreed to change the country’s regulations to bypass a shareholder vote and announce the deal over the weekend, ahead of the markets opening.
Also, as part of the deal, the Swiss National Bank (SNB) committed to provide over $100 billion in liquidity line to USB. According to the FT, the deal was heavily influenced by the SNB and the Swiss Financial Market Supervisory Authority (FINMA). United States and European regulators are said to have approved the deal, with coordinated statements to be released later on Sunday.
UBS is taking over Credit Suisse pic.twitter.com/XF8LEZFXlx
— David Gura (@davidgura) March 19, 2023
Swiss authorities considered alternatives to Credit Suisse in case the deal with UBS failed over the weekend, including a full or partial nationalization of the bank as an emergency option.
Credit Suisse’s rescue plan would also include losses to bondholders. The move prompted European regulator’s concerns that it would undermine investor confidence in Europe’s financial sector.
UBS and Credit Suisse have been locked in talks with regulators since March 15, after Credit Suisse largest shareholder, Saudi National Bank, said during an interview that it wouldn’t increase its investment in the Swiss bank due to regulations. Concerns about the bank’s ability to profit were heightened by the comments, raising fears about possible shareholder financing.
Credit Suisse was founded in 1856 to finance the expansion of Swiss railroads. It was considered the second-largest bank in the country.