BREAKING: UBS Offers $2 billion For Troubled Credit Suisse

Photo: Reuters

Prime Business Africa reports that UBS has agreed to buy up Credit Suisse and has in fact increased its offer to over $2 billion. This came following indications that Swiss authorities Swiss authorities are poised to change the country’s laws and bypass a shareholder vote required for the transaction.

This decision and the offer by UBS follows a rush to close the deal before Monday, March 20, 2023.

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International media reports that regulators and banks are working towards announcing the deal on Sunday evening. However, some of the people criticised the plans to circumvent normal corporate governance rules by preventing a UBS shareholder vote.”

A tweet by Financial Times at 5 p.m on Sunday, saying that “UBS has agreed to buy Credit Suisse after increasing its offer to more than $2bn” had elicited a lot of reactions from Twitter users.

Twitter user, Harry Lyn Beck @tismadnessnow, while replying the tweet, queried the move and asking: “How much is the FED and Treasury contributing to bail out the Swiss banking system?”

“Curious George@Curious80891460″ in his reply wondered why it was a “72% discount to Friday’s close.”

Quoting at least three people who are close to the deal, Financial Times reports that the Aall-share deal between Switzerland’s two biggest banks is set to be announced as soon as Sunday evening and will be priced at a fraction of Credit Suisse’s closing price on Friday, all but wiping out the target’s shareholders”

It further notes that “UBS will now pay more than SFr0.50 a share in its own stock, up from a bid of SFr0.25 earlier today worth around $1bn that was rejected by the Credit Suisse bid. But the price remains far below Credit Suisse’s closing price of SFr1.86 on Friday, the sources said.

Two people close to the deal reportedly confirmed that the Swiss National Bank has agreed to offer a $100bn liquidity line to UBS as part of the deal.

UBS has as well agreed to a softening of a material adverse change clause that would void the deal if its credit default spreads jump. The material adverse change clause applies for the period between the signing and closing of the deal.

There has been limited contact between the two lenders and the terms have been heavily influenced by the Swiss National Bank and regulator Finma, Financial Times reports, quoting its sources.

The US Federal Reserve has given its assent to the deal, they added. Vincent Kaufmann, chief executive of Ethos Foundation, which represents Swiss pension funds that own between 3 per cent and 5 per cent of Credit Suisse and UBS, told the Financial Times that the move to bypass a shareholder vote on the deal was poor corporate governance.

“I can’t believe our members and UBS shareholders will be happy about this,” he said. “I have never seen such measures taken; it shows how bad the situation is.”

Meanwhile, Saudi Arabia, a major investor in Credit Suisse had said it would not bail out the bank as it struggles to avert a collapse.