The Dallas Morning News

UBS may absorb rival Credit Suisse

Takeover of troubled bank may ease economic concerns


Switzerlan­d’s largest bank, UBS, is reportedly in talks to take over its troubled rival Credit Suisse, a move that could ease growing concerns that the turbulence at the European banking behemoth could ripple through the global economy.

Boards at Switzerlan­d’s two biggest banks are meeting this weekend about plans to merge as early as Saturday evening, according to a Financial Times report.

The discussion­s are the latest developmen­t in more than a week of tumult and fears about the resilience of the global financial system after the shocking collapse of Silicon Valley Bank and subsequent actions on Wall Street and by regulators to shore up major financial institutio­ns.

The banks’ key regulators in the United States, Britain and Switzerlan­d also are considerin­g the legal structure of a deal, as UBS seeks concession­s, including some form of government agreement to cover future legal costs, according to the Financial Times. Credit Suisse’s shares jumped 7% in after-hours trading.

Credit Suisse and UBS declined to comment. The Swiss National Bank and the U.S. Federal Reserve did not immediatel­y respond to requests for comment.

Germany’s Deutsche Bank also is watching to see if it could acquire certain Credit Suisse businesses, according to a Bloomberg News report.

A takeover could limit fears that the turmoil at Credit Suisse and multiple troubled financial institutio­ns in the United States would create a banking contagion, similar to the events of the 2008 financial crisis. Even after actions by government­s and financial institutio­ns this week, the stock market has showed continued worry that the banking industry’s tumult has not settled. Yet experts say that the financial system appears to be on firm ground and that the volatility in the stock market may reflect news developmen­ts rather than a signal of a broader crisis.

The discussion­s follow a week of chaos for Credit Suisse. On Thursday, Switzerlan­d’s central bank provided the company a $53.7 billion liquidity lifeline, after the bank disclosed “material weaknesses” in its financial reporting.

But Credit Suisse’s underlying troubles began well before the recent trouble at banks in the United States. The 167year-old bank, which originally served the ultrawealt­hy, has had financial losses, risk and compliance problems, and a critical data breach. Credit Suisse in October disclosed that it suffered significan­t customer withdrawal­s, and in 2021, it experience­d major losses because of its exposure to the collapse of New Yorkbased Archegos Capital Management.

Meanwhile, Silicon Valley Bank’s parent company on Friday filed for Chapter 11 bankruptcy.

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