Under the deal being discussed, UBS would only keep parts of Credit Suisse’s investment bank that fill gaps either geographically or in certain product areas where UBS lacks a presence.
Photo: Francesca Volpi/Bloomberg News
UBS
Group AG has offered to buy rival
Credit Suisse
for around $1 billion in a deal engineered by Swiss regulators to restore trust in the banking system, according to people familiar with the matter.
One option would involve buying the entirety of Credit Suisse and then spinning off its local Swiss operations into an independent entity, the people said. UBS would keep Credit Suisse’s valuable wealth-management business.
Discussions are continuing and the contours of the deal could still change as UBS and Swiss regulators hash out details of the plan and to what extent Swiss authorities would provide guarantees or backstops.
Officials are racing to consummate the deal before markets open in Asia, the people said. Regulators have offered to waive a requirement for customary shareholder votes to expedite the sale, one of the people said.
An issue in the discussions is what cost-saving UBS would be allowed to generate by Swiss authorities through moves such as job cuts, a key factor in how much UBS can afford to pay for the deal, the people said.
UBS would only keep parts of Credit Suisse’s investment bank that fill gaps either geographically or in certain product areas where UBS lacks a presence.
The price would be a substantial discount to Credit Suisse’s market value, which closed Friday at around $8 billion. UBS would be taking on large unknown costs and the complexities of integration. Some rich customers keep money at both banks and after a merger might decide to take some of their money to third parties for diversification purposes.
The size of UBS’s offer was reported earlier by the Financial Times.
Credit Suisse’s so-called bail-in bonds are expected to be substantially written down, relieving some of the debt burden UBS would take on, according to some of the people familiar with the matter.
More to follow as news develops.
—Patricia Kowsmann contributed to this article.
