UBS in talks to snap up crisis-hit Credit Suisse

Shares in Swiss lender fall again as central bank and financial regulator meet to discuss takeover by rival

UBS is reportedly in talks to buy Credit Suisse as Swiss regulators bring the country’s two biggest banks to the table in a bid to prevent a broader crisis.

Switzerland’s central bank and Finma, the country’s financial regulator, were said to be orchestrating talks between the two companies, which could see UBS snap up all or part of its beleaguered rival.

The potential takeover, which was first reported by the Financial Times, will see the boards of both companies meet separately over the weekend to weigh up a potential deal.

UBS is worth more than $56bn (£46bn), while Credit Suisse closed yesterday with a value of $8bn after its share price tanked this week.

The reports came as European banks were last night racing to cut back ties to Credit Suisse. At least four rivals were restricting or more closely scrutinising trades with the Swiss bank yesterday evening, including HSBC, Societe Generale and Deutsche Bank.

Credit Suisse, which insists its finances are healthy, declined to comment on the reports.

Efforts to restore confidence fell flat yesterday, with the bank’s shares falling by as much as 12pc. The latest slump came just a day after the Swiss central bank said it would lend up to $54bn to shore up Credit Suisse.

Global regulators met last night to discuss how to stabilise the bank and the wider financial system, the Financial Times reported.

Top executives at Credit Suisse were preparing for talks this weekend.

A potential break-up is being looked at, with one person involved in the talks telling the Financial Times: “We’re looking at everything possible. There is nothing that is taboo.”

Some analysts have suggested only a takeover by arch-rival UBS would be enough to stabilise the situation.

Major institutions were limiting or monitoring dealings with Credit Suisse. France’s Societe Generale was maintaining existing trades with Credit Suisse but has decided not to increase them, while Deutsche Bank has slashed the value it places on Credit Suisse securities that are put up by clients as collateral for loans, sources told Reuters.

HSBC has also started scrutinising loans linked to Credit Suisse securities more closely, Reuters said. However, the bank is thought to be waiting until next week to make any decisions on lowering exposure.

Another global bank is seeking to reduce its exposure to Credit Suisse through unsecured debts, Reuters reported, while a fifth has asked Credit Suisse to “gross settle”, or provide upfront payments, in trades.

Societe Generale and Deutsche Bank declined to comment on the report. HSBC did not immediately respond.

Johann Scholtz, a banking analyst at Morningstar, said stubborn worries about Credit Suisse reflected ongoing doubts about the viability of the turnaround plan put forward by Ulrich Koerner, the bank’s chief executive, and chairman Axel Lehmann. He added that investors were also fearful that markets could be headed for a repeat of the 2008 financial crisis, even though the banking sector is better-capitalised today thanks to various reforms.

Frédérique Carrier, head of investment strategy at RBC Wealth Management, also warned more action was needed.

“When confidence is dented, it is difficult to restore, so we expect further measures to be announced,” she told The Daily Telegraph.

Credit Suisse shares had initially been positive but plunged on Friday afternoon, despite the pledge of support from the Swiss central bank.

It came amid a wave of selling for US bank shares. Shares in California lender First Republic plunged another 30pc in New York despite a $30bn deposit infusion from a coalition of Wall Street banks on Thursday evening.

Other regional banks also faced pressure, with Pacwest down 20pc and Western Alliance falling 17pc.

Banking stocks have plunged following the collapse of Silicon Valley Bank last week.