According to a report in the Financial Times, the major Swiss bank UBS is said to be interested in taking over part or all of its struggling competitor Credit Suisse. As the newspaper reports, citing insiders, the supervisory boards of the two largest Swiss credit institutions want to meet separately at the weekend to hold appropriate consultations. It would be the most momentous bank merger in Europe since the financial crisis. When asked on Saturday, UBS and Credit Suisse said they would not comment.
According to the report, the Swiss National Bank and the Swiss regulator Finma are organizing the talks to boost confidence in the country's banking sector. The regulators have told their US and UK counterparts that a merger of the two banks is their "Plan A." Other options would also be discussed. The Swiss National Bank wants to find an uncomplicated solution before the markets open on Monday. The Financial Times writes that there is no guarantee that an agreement will be reached. According to the newspaper, the Bank of England and the US Federal Reserve declined to comment.
The lurching major bank Credit Suisse had recently suffered from a significant loss of investor confidence. The share price had fallen to a record low after the bank's largest investor ruled out providing further capital and the institution continued to struggle with cash outflows. The Swiss National Bank (SNB) then provided the institute with loans of up to CHF 50 billion (almost EUR 51 billion). For the central bank, financial regulators and government, it is also about preventing a general banking crisis.
Fusion would have far-reaching consequences
A full merger would create one of the largest systemically important financial institutions in Europe. The balance sheet total of UBS - the largest Swiss bank - amounted to the equivalent of 1,030 billion euros in 2022, that of Credit Suisse to the equivalent of 535.44 billion euros. UBS had made a profit of $7.6 billion in 2022 (currently $7.07 billion). Credit Suisse, on the other hand, reported a loss of CHF 7.3 billion (EUR 7.4 billion).
In the entire past financial year, Credit Suisse customers had withdrawn assets of around CHF 123 billion. The bank's stock market value has fallen by around two-thirds to almost nine billion francs in the past twelve months. At its peak in the mid-nineties, the bank was worth more than 110 billion francs.
After the collapse of the start-up financier Silicon Valley Bank, which started the banking quake, and the turbulence surrounding Credit Suisse, Chancellor Olaf Scholz (SPD) sees no danger of a new major crisis in Germany and Europe - and no consequences for Germans Saver. The monetary system is no longer as fragile as before the financial crisis. The deposits are safe, he recently told the "Handelsblatt".
Claims from Germany
The FDP parliamentary group leader in the Bundestag, Christian Dürr, also emphasized: "The security mechanisms are better today than they were 15 years ago." With a view to the latest interest rate hike in the euro area, he said that the European Central Bank is independent and committed to monetary stability. "The stability of money is incredibly important for confidence in the economy and households. It would be a big mistake to ignore that because individual banks have managed poorly," Dürr told Mediengruppe Bayern.
The citizens' movement Finanzwende called on Finance Minister Christian Lindner (FDP) to regulate the financial markets more strictly. A stable financial system is finally needed, as has been promised for 15 years, according to the club in a petition it started on Saturday. In it, Finanzwende calls for the completion of the European banking union, the introduction of a separate banking system and a financial transaction tax, as well as the regulation of shadow banks. "After the financial crisis of 2008, strict rules should actually be created for banks," said Gerhard Schick, member of the board of directors of Finanzwende. However, the regulation of the financial markets is not up to the challenges of our time.