UBS agrees to take over Credit Suisse for over $3B

UBS Group will acquire rival Credit Suisse for 3 billion Swiss Francs ($3.23 billion) the companies have said.

Under the terms of the all-share deal agreed on Sunday, Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held for a total consideration of 3 billion francs. 

The deal was announced after urgent talks aimed at sparing the embattled bank from a bloodbath when the markets reopen.

The two largest banks in the wealthy Alpine nation famed for its banking prominence have been in negotiations throughout the weekend, with the government, the central bank and financial regulators all involved.

Earlier, the Financial Times newspaper, which was the first on Friday to report the prospect of Switzerland's biggest bank swallowing up Credit Suisse, said UBS had agreed to buy it for $2 billion, with its fellow Zurich-based lender having spurned an earlier offer of $1 billion.

After suffering heavy falls on the stock market last week, Credit Suisse's share price closed Friday at 1.86 Swiss francs, with the bank worth just over $8.7 billion.

Credit Suisse's share price has tumbled from 12.78 Swiss francs in February 2021 due to a string of scandals that it has been unable to shake off.

READ MORE: Credit Suisse faces demise as UBS, Swiss regulators discuss takeover

Time is money

UBS was being urged by the authorities to get a deal over the line before the stock exchange reopens at 0800 GMT on Monday, in a bid to reassure investors and avoid a wave of contagious panic on the markets.

The Swiss authorities felt they had no choice but to push UBS into overcoming its reluctance, due to the enormous pressure exerted by Switzerland's major economic and financial partners, fearing for their own financial centres, said Blick newspaper.

A merger of this scale – involving swallowing up all or part of a bank arousing growing investor unease – would normally take months.

While under Swiss rules, UBS would typically have to consult shareholders over six weeks, it could use emergency measures to skip the consultation period and a shareholder vote, the FT said, citing unnamed sources.

The 20 Minuten newspaper filmed members of the Swiss government, including President Alain Berset, heading into the finance ministry in Bern early Sunday.

The government did not respond when contacted by AFP on Sunday.

Like UBS, Credit Suisse is one of 30 banks around the world deemed to be Global Systemically Important Banks –– of such importance to the international banking system that they are considered too big to fail.

But the market movement seemed to suggest the bank was being perceived as a weak link in the chain.

The SonntagsZeitung newspaper called it "the merger of the century".

READ MORE: Crisis-hit Credit Suisse to borrow over $50B after shares plunge 30 percent