UBS offers to acquire Credit Suisse for $1 billion amidst banking turmoil

UBS has made an offer to acquire Credit Suisse for up to $1 billion. The proposed all-share deal between the two biggest banks in Switzerland is expected to be signed as soon as Sunday evening, Financial Times reported. The deal is reportedly going to be priced at a fraction of Credit Suisse's closing price on Friday.

The acquisition offer comes amidst a period of instability and uncertainty for Credit Suisse. The bank has been facing a crisis of confidence in the wake of the recent collapse of Silicon Valley Bank and Signature Bank. As one of the most globally significant banks to be caught in the turmoil, Credit Suisse has been under pressure from regulators and authorities to find a solution quickly.

The offer from UBS is expected to result in significant changes for both banks. The Swiss government is reportedly planning to change the country's laws to bypass a shareholder vote on the deal, which would expedite the process of finalizing the acquisition.

UBS made an offer on Sunday morning to acquire Credit Suisse for 0.25 Swiss francs ($0.27) per share to be paid in UBS stock, according to FT. This represents a fraction of Credit Suisse's closing share price of 1.86 Swiss francs on Friday.

The offer also includes a condition of a 'material adverse change', which would void the deal if Credit Suisse's credit default spreads increase by 100 basis points or more, as reported FT.

According to a Reuters report, a source familiar with the matter had earlier stated that UBS was seeking $6 billion from the Swiss government in connection with its proposed acquisition of Credit Suisse.

The requested guarantees by UBS would cover the expenses of winding down certain parts of Credit Suisse and any potential litigation charges, as reported by two individuals familiar with the negotiations.

While the talks are ongoing, one source had cautioned that the discussions were facing significant obstacles and that up to 10,000 jobs may have to be cut if the two banks were to merge. As a result, the Swiss Bank Employees Association has called for the formation of a task force to address the employment risk.

The negotiations, which took place over the weekend, occurred against the backdrop of a tumultuous week for banking stocks and efforts in Europe and the United States to support the sector following the collapse of Silicon Valley Bank and Signature Bank.

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