UBS offers to buy Credit Suisse for ‘substantially’ more than $1 billion, sources say

FAN Editor

A customer walks towards an automated teller machine (ATM) inside a Credit Suisse Group AG bank branch in Geneva, Switzerland, on Thursday, Sept. 1, 2022. 

Jose Cendon | Bloomberg | Getty Images

Swiss banking giant UBS on Sunday has entered talks to buy its embattled rival Credit Suisse for “substantially” more than 1 billion Swiss francs, sources told CNBC’s David Faber.

The Financial Times reported that UBS has agreed to buy the bank for more than $2 billion, marking a substantial increase from the initial $1 billion offer the FT reported earlier Sunday. Faber said the price of the deal increased throughout the day’s negotiations.

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The Swiss government is holding a news conference to address the deal at 2:30 p.m. ET. Credit Suisse and UBS declined to comment on the reports when contacted by CNBC.

Credit Suisse reportedly balked at UBS’ initial offer, arguing it was too low and would hurt shareholders and employees, people with knowledge of the matter told Bloomberg.

Swiss authorities have also reportedly been considering full or partial nationalization of the bank as an alternative to the UBS takeover, according to a Sunday Bloomberg report.

The UBS deal is being orchestrated quickly, so the Swiss are preparing for the case that it falls through, Bloomberg said, citing people with knowledge of the matter. The country is reportedly considering whether it would take over the bank completely or hold a significant equity stake.

The UBS offer comes after Credit Suisse shares logged their worst weekly decline since the onset of the coronavirus pandemic, despite an announcement that it would access a loan of up to 50 billion Swiss francs ($54 billion) from the Swiss central bank.

It had already been battling a string of losses and scandals, and last week sentiment was rocked again with the collapse of Silicon Valley Bank and the shuttering of Signature Bank in the U.S., sending shares sliding.

Credit Suisse’s scale and potential impact on the global economy is much greater than the U.S. banks. The Swiss bank’s balance sheet is around twice the size of Lehman Brothers when it collapsed, at around 530 billion Swiss francs as of end-2022. It is also far more globally inter-connected, with multiple international subsidiaries — making an orderly management of Credit Suisse’s situation even more important.

Credit Suisse lost around 38% of its deposits in the fourth quarter of 2022, and revealed in its delayed annual report early last week that outflows have still yet to reverse. It reported a full-year net loss of 7.3 billion Swiss francs for 2022 and expects a further “substantial” loss in 2023.

The bank had previously announced a massive strategic overhaul in a bid to address these chronic issues, with current CEO and Credit Suisse veteran Ulrich Koerner taking over in July.

This is a developing story. Please check back for updates.

—CNBC’s Elliot Smith contributed to this report.

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