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A customer walks to an automated teller machine (ATM) inside a bank branch of Credit Suisse Group AG in Geneva, Switzerland, Thursday, September 1, 2022.
Jose Cendon | Bloomberg | Getty Images
Swiss banking giant UBS Sunday began talks to buy its embattled rival Swiss credit for “substantially” more than a billion Swiss francs, sources told CNBC’s David Faber.
The Financial Times reported that UBS agreed to buy the bank for more than $2 billion, marking a substantial increase from the initial $1 billion bid announced by the FT on Sunday.
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Faber said the price of the deal rose throughout the day’s negotiations.
Credit Suisse, however, reportedly balked at UBS’s initial offer, arguing that it was too low and would hurt shareholders and employees, people with knowledge of the matter told Bloomberg.
Credit Suisse and UBS declined to comment on the information when contacted by CNBC.
Swiss authorities are also reportedly considering a full or partial nationalization of the bank as an alternative to buying UBS, according to a Sunday report. Bloomberg report.
The UBS deal is being orchestrated quickly, so the Swiss are preparing in case it fails, Bloomberg said, citing people with knowledge of the matter. The country would debate whether it would take over the bank completely or hold a large equity stake.
UBS’s offer comes after Credit Suisse shares posted their worst weekly decline since the start of the coronavirus pandemic, despite announcing that it would have access to a loan of up to 50 billion Swiss francs (54 billion dollars) from the Swiss central bank.
It had already battled a string of losses and scandals, and last week sentiment was rattled again with the collapse of Silicon Valley Bank and the closure of Signature Bank in the US, sending stocks tumbling.
Credit Suisse’s size and potential impact on the global economy is far greater than that of US banks. The Swiss bank’s balance sheet is about twice as large as that of Lehman Brothers when it failed, at around 530 billion Swiss francs at the end of 2022. It is also much more globally interconnected, with multiple international subsidiaries, which makes the orderly management of Credit Suisse’s situation even more important.
Credit Suisse lost around 38% of its deposits in the fourth quarter of 2022 and revealed in its delayed annual report early last week that outflows had not yet reversed. It reported a net loss of 7.3 billion Swiss francs for the year 2022 and expects another “substantial” loss in 2023.
The bank previously announced a massive strategic overhaul in a bid to address these chronic issues, with current CEO and Credit Suisse veteran Ulrich Koerner taking over in July.
This is a developing story. Please check for updates.
–CNBC’s Elliot Smith contributed to this report