Credit Suisse Acquired by UBS Group for $2 Billion: Details
- The Switzerland-based bank, Credit Suisse, has been officially bailed out and acquired by UBS, the largest Swiss bank, for around $2 billion.
- An initial offer of $1 billion by UBS was rejected by the shareholders of the banking firms since it was significantly below its valuation of $8 billion.
- The deal was hushed up by FINMA and SNB before the markets opened on Monday to prevent a loss of public confidence in the Swiss bank.
- US and European regulators have also greenlit the acquisition and will release a coordinated release on March 19.
- European regulators are concerned that investors will lose confidence in the financial and banking sectors of Europe.
Credit Suisse, one of the largest banking institutions around the globe with presence in Europe, Asia, and other parts of the world, found itself in a crisis as the US banking system started collapsing, starting with the bankruptcy of the Silicon Valley Bank (SVB) and the Signature Bank. Interestingly, the Zürich, Switzerland-based bank has been officially bailed out and acquired by UBS, the largest bank in Switzerland, for around $2 billion.
In a historic deal between two of the largest banks in Switzerland, the UBS Group doubled its initial offer to $2 billion and purchased the assets belonging to Credit Suisse, its major competitor. Furthermore, according to a report from the Financial Times, UBS offered the Swiss bank close to $1 billion on March 18 which was significantly below the company’s market valuation, and as a result, the deal was rejected by the board of the troubled bank.
As of March 17, the official valuation of Credit Suisse was around $8 billion, according to data from Companies Market Cap. Therefore, a rejection of the deal on March 18 seemed inevitable, and as a result, UBS doubled their offer and finally completed the acquisition over the weekend. It is crucial to note that the deal was quietly closed before the markets opened on Monday to prevent a loss of public confidence in the Swiss bank.
According to a previous report from Bitnation, the Swiss National Bank (SNB) and the Swiss Financial Market Supervisory Authority (FINMA) decided to bypass the local laws, which grant a six-week period for the shareholders of the company being acquired, i.e., Credit Suisse, to decide if they want to go ahead with the acquisition and vote on the same.
The authorities wanted UBS and Credit Suisse to work with each other and come to a conclusion before the end of Saturday night. The acquisition was accelerated by bypassing the shareholders’ vote, and the international counterparts were told that SNB and FINMA “regard a deal” with UBS as the “only option” to prevent a “collapse in confidence” in the troubled banking institution.
Moreover, as a part of the deal, the SNB provided over $100 billion in liquidity line to USB, and according to the reports, the deal was heavily influenced by FINMA and the SNB. US and European regulators have also greenlit the acquisition and will release a coordinated release on March 19.
It is also crucial to note that BlackRock, the largest asset management company in the world, announced on the social media platform Twitter that “it is not participating in any plans to acquire all or any part of Credit Suisse and has no interest in doing so.”
Furthermore, according to a report from Reuters citing two sources with knowledge of the matter, the acquisition deal of Credit Suisse may impose losses on its bondholders and even result in the full or partial nationalization of Credit Suisse Group AG. European regulators are concerned that investors will lose confidence in the financial and banking sectors of Europe, a fear similar to that of US regulations.
Also, as per an earlier report from Bitnation, despite the failure of two major banks in the US, President Joe Biden claims that the US will do “whatever is needed” to protect banks while adding that the US banking system is safe.