UBS has agreed to buy Credit Suisse after increasing its offer to more than $2 billion under the government-brokered shareholding deal, according to a report on Sunday.
UBS will pay more than 0.50 francs ($0.5401) per share for its own shares, well below Credit Suisse’s closing price of 1.86 francs on Friday (73% discount, to be precise), reported the Financial Times, citing sources.
The Swiss National Bank has offered UBS Group AG around $100 billion in cash to help it take over Credit Suisse Group AG’s operations as part of the deal, the FT added, citing two people familiar with the matter.
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According to the report, UBS agreed to a relaxation of a material adverse change clause that would void the deal if its credit default spreads increased. Swiss authorities should change the country’s law to circumvent the UBS shareholder vote, according to the report.
Credit Suisse, 167, is the biggest name caught in the turmoil sparked by the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week, sending bank stocks into a rout and prompting investors authorities to rush extraordinary measures to keep banks afloat.
Credit Suisse shares lost a quarter of their value last week. It was forced to tap $54 billion in central bank funding as it tried to recover from a series of scandals that undermined investor and customer confidence.
The firm ranks among the largest wealth managers in the world and is considered one of the 30 global systemically important banks whose failure would affect the entire financial system.
UBS had previously filed an offer of around $1 billion, or 0.25 francs per share, for Credit Suisse, which the company had rejected.
While Credit Suisse avoided a bailout during the financial crisis, it has been hammered in recent years by a series of blowouts, scandals, management changes and legal troubles. Clients had withdrawn more than $100 billion in assets in the last three months of last year amid growing concerns over its financial health, and outflows continued even after appealing to shareholders in a capital increase of 4 billion francs.
With contributions from Reuters
