Credit Suisse reportedly resisting $1 billion takeover offer by UBS

The offer from UBS is an all-share deal, with the Swiss government planning to change the country's laws to bypass a shareholder vote on the acquisition.

Credit Suisse-UBS

UBS has reportedly made an offer to buy Credit Suisse for up to $1 billion, as the Swiss banking giant faces a crisis of confidence following the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week. However, the proposed deal is being met with resistance from Credit Suisse, according to Bloomberg. According to individuals familiar with the matter, Credit Suisse considers the offer to be inadequate and is concerned that it would negatively impact shareholders and employees who have deferred stock.

Meanwhile, two sources with knowledge of the matter revealed that Swiss authorities are considering imposing losses on Credit Suisse bondholders as part of a rescue plan, a move that European regulators are wary of due to potential ripple effects on investor confidence in other institutions.

The offer from UBS is an all-share deal, with the Swiss government planning to change the country's laws to bypass a shareholder vote on the acquisition. The deal is set to be signed as soon as Sunday evening and will be priced at a fraction of Credit Suisse's closing price on Friday.

UBS is showing little appetite for Credit Suisse's investment banking business as part of a government-orchestrated takeover, according to Bloomberg.

Credit Suisse's plan to spin off its investment bank under the First Boston brand is also in doubt due to the takeover talks. Plans to separate and eventually list that business is also in doubt.

UBS was previously reported to be seeking a guarantee of $6 billion to cover the cost of winding down parts of Credit Suisse and potential litigation charges. UBS has also insisted on a "material adverse change" that voids the deal in the event its credit default spreads jump by 100 basis points or more, a Reuters report added.

While regulators want a resolution before markets reopen on Monday, one source cautioned that the talks are encountering significant obstacles, and 10,000 jobs may have to be cut if the two banks combine. The Swiss Bank Employees Association on Sunday called for the immediate creation of a task force to deal with the risk to jobs.

The frenzied weekend negotiations over the future of Credit Suisse follow a brutal week for banking stocks and efforts in Europe and the United States to shore up the sector. US President Joe Biden's administration moved to backstop consumer deposits while the Swiss central bank lent billions to Credit Suisse to stabilize its shaky balance sheet.