Dan Kitwood
Switzerland’s largest bank UBS (NYSE: UBS) reportedly made an offer to acquire troubled lender Credit Suisse (CS) for up to $1 billion in exchange for its shares, according to a Financial Times report.
The agreement values the nation’s second-largest private lender at a fraction of its current market value of $8.6 billion. UBS offered a price of 0.25 Swiss francs, nearly 87% below Credit Suisse’s Friday close of 1.86 Swiss francs.
As of Friday’s close, UBS (UBS) had a market capitalization of $57.9 billion, while Credit Suisse (CS), which saw its stock fall 73% year-on-year, ended the session with a value market of 8.6 billion dollars. Credit Suisse (CS) has lost a third of its value since early March.
The report further adds that there is no guarantee that a deal will be reached as UBS has several concerns, including a request for $6 billion from the Swiss government to cover the potential deal. UBS also demanded a “material adverse change” that voids the deal if its credit default swaps rise by 100 basis points or more.
Credit Suisse, UBS and the Swiss government declined to comment.
The 167-year-old Credit Suisse (CS) has been caught up in the turmoil caused by the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week.
Credit Suisse (CS) borrowed up to 50 billion francs ($54 billion) from the Swiss National Bank on Thursday.
There were several reports of interest in Credit Suisse from other rivals. Bloomberg reported that Deutsche Bank was considering the possibility of buying some of its assets, while US financial giant BlackRock denied a report that it was part of a competing bid for the bank.
