Swiss regulators are racing to seal a deal before Credit Suisse collapses amid fears of banking contagion.
UBS, Credit Suisse and Swiss bank regulators may reach a deal by Saturday evening to prevent a collapse.
The Swiss National Bank and Swiss regulator FINMA have told their international counterparts they regard a deal with UBS Group (UBSG.S) as the only way to prevent a collapse in confidence in Credit Suisse Group (CSGN.S), the Financial Times reported on Saturday.
UBS, Credit Suisse and key regulators are rushing to finalise a deal on the merger of the two Swiss banks as soon as Saturday evening, the FT reported, citing people familiar with the matter.
Reuters earlier reported that UBS was coming under pressure from the Swiss authorities to carry out a takeover of its local rival to get the market turmoil surrounding Credit Suisse under control. The plan could see the Swiss government offer a guarantee against the risks involved, while Credit Suisse’s Swiss business could be spun off.
Credit Suisse shares tumbled by as much as 30% to a new record low on Wednesday after Saudis pulled funding.
Trading in the Swiss banking giant’s stock was halted several times on Wednesday.
Saudi National Bank, which holds 9.88% of Credit Suisse said it is unable to purchase anymore shares because of regulations.
“We cannot because we would go above 10%. It’s a regulatory issue,” Saudi National Bank Chairman Ammar Al Khudairy told Reuters.
Credit Suisse CEO Ulrich Koerner told Reuters the Swiss bank’s liquidity base is “very, very strong.”
The US Treasury on Wednesday announced it is reviewing the US’s financial exposure to Credit Suisse as the Swiss banking giant’s stock plummeted.