It has been a turbulent few weeks for the banking sector, including Credit Suisse. The solvency of many banks is under discussion. The Financial Times reported that a potential buyout agreement has been reached between Credit Suisse and UBS. UBS is negotiating with Credit Suisse over the weekend about the buyout. It looks like a deal has finally been reached. According to reports, UBS will buy Credit Suisse for more than $2 billion.
Credit Suisse & UBS Acquisition Details
Credit Suisse and UBS are two of Switzerland’s largest banks. Those familiar with the matter say the deal could be signed as early as Sunday evening. In addition, the price of the deal could be just a fraction of Credit Suisse’s closing price on Friday. There is speculation that this move may have a negative impact on Credit Suisse shareholders.
According to reports, UBS also agreed that they would scam about the material adverse amendment clause, or MAC, which typically voids a deal like this if credit default spreads skyrocket. Many are said to be upset by the two entities not following normal corporate governance laws as shareholders cannot vote on the matter.
Swiss National Bank & Finma
It was reported that both lenders have had limited direct contact and that the terms of the deal were influenced by Finma, a Swiss financial authority, and the Swiss National Bank. In addition, the US Federal Reserve weighed in and agreed to move forward with the buyout.
Regulators have been involved since Wednesday, around the time Credit Suisse asked the Swiss National Bank for an emergency loan of about $54 billion. It was at that time that the central bank took on the merger process.