UBS is said to be in takeover talks with Credit Suisse amid turmoil

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Switzerland’s biggest bank UBS is reportedly in talks to take over its troubled rival Credit Suisse, easing growing concerns that turmoil at the European bank could ripple through the global economy.

Boards at Switzerland’s two biggest banks are meeting later this week on plans to merge by Saturday evening. According to a Financial Times report. The latest development debates more than a week of confusion and fears about the resilience of the global financial system after the stunning collapse of a Silicon Valley bank and moves by Wall Street and regulators to crack down on major financial institutions.

According to the Financial Times, major regulators of banks in the United States, Britain and Switzerland are also considering the legal framework for a deal as UBS seeks concessions, including some form of government contract to cover future legal costs. Shares of Credit Suisse rose 7 percent in after-hours trading.

What to know about the Credit Suisse crisis and its global impact

Credit Suisse and UBS declined to comment. The Swiss National Bank and the US Federal Reserve did not immediately respond to requests for comment.

Germany’s Deutsche Bank is looking at whether it can acquire some Credit Suisse businesses. Bloomberg News reports.

A takeover could limit fears that the turmoil at Credit Suisse and many other troubled financial institutions in the U.S. could create a banking contagion, as happened in the 2008 financial crisis. Even after moves by governments and financial institutions this week, the stock market continues to show concern that the banking sector’s mess has not been resolved. Yet experts say the financial system appears to be on solid footing and volatility in the stock market may reflect news developments rather than signal a broader crisis.

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Credit Suisse had a week of confusing discussions. On Thursday, Switzerland’s central bank provided the company with $53.7 billion in liquidity.

But Credit Suisse’s fundamental problems began before the recent trouble at banks in the United States. The 167-year-old bank, which originally served the ultra-wealthy, has been plagued by financial losses, risk and compliance issues and a critical data breach. Credit Suisse reported in October that it was hit significantly by client withdrawals and a major loss in 2021 due to the collapse of New York-based Archigos Capital Management.

The moves in Europe follow Thursday’s announcement that 11 major banks in the U.S. will deposit $30 billion into First Republic Bank. The move was intended to shore up the bank and send a signal about the broader safety of the US financial system. Meanwhile, Silicon Valley Bank’s parent company filed for Chapter 11 bankruptcy on Friday.

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