Credit Suisse bank: UBS is in talks to take over its troubled rival

 Credit Suisse bank: UBS is in talks to take over its troubled rival

Switzerland's biggest bank, UBS, is in advanced talks to buy all or part of its troubled rival Credit Suisse.

Credit Suisse, Switzerland's second largest bank, is experiencing a confidence crisis, and its shares have fallen sharply in recent days, sending ripples of concern through the markets.

According to the Financial Times, UBS is offering up to $1 billion (£820 million) for Credit Suisse.

Regulators are attempting to reach an agreement before markets reopen on Monday.

Credit Suisse's problems, combined with the failures of two smaller US banks in the last two weeks, have cast doubt on the global financial system's health.

Credit Suisse is one of around 30 banks worldwide that are deemed too big to fail due to their importance to the banking system.

However, the 167-year-old institution is losing money and has been plagued by a slew of issues in recent years, including money laundering charges.

The Swiss National Bank's emergency $54 billion (£44.5 billion) lifeline on Wednesday failed to reassure markets, and Credit Suisse shares fell 24%, sparking a wider sell-off on European markets.

According to the Financial Times, which first reported that regulators and the Swiss National Bank were facilitating talks between the two Swiss banking titans, a deal could be signed as soon as Sunday evening.

The deal that is currently being considered would value Credit Suisse shares at less than a seventh of what they were on Friday. The FT, however, stated that terms could change and that no agreement had been reached.

UBS shareholders would normally have six weeks to consider a transaction of this magnitude, but according to the Financial Times, Swiss authorities are planning to change the country's laws to avoid a shareholder vote on the transaction.

While regulators and management discuss Credit Suisse's future, officials at the Bank of England have confirmed that they are in close contact with their counterparts at the Swiss National Bank. The UK Treasury is also keeping an eye on the situation.

According to Mohamed El-Erian, chief economic advisor at German financial services firm Allianz, the deal would amount to a significant intervention by Swiss authorities.

"This is not a voluntary action; it's a shotgun wedding done to restore financial stability," Mr El-Erian told the BBC. "Without it Credit Suisse may end up in a death spiral, in which it finds it much harder to undertake its banking activities.

"At a time when there are banking concerns in the United States, this could raise questions about other banks."

According to Mr. El-Erian, the current turmoil may cause banks to become more "risk averse," resulting in a decrease in credit availability.

However, this amounted to a "headwind" for the global economy, rather than the abrupt halt experienced during the 2008 financial crisis, which was "in a completely different league" than today's problems, he said.

According to Reuters, UBS has asked the Swiss government to cover about $6 billion (£4.9 billion) in costs if it buys Credit Suisse.

Credit Suisse reported a loss of 7.3 billion Swiss francs ($7.9 billion; £6.5 billion) in 2022, its worst year since the 2008 financial crisis, and has warned that it will not be profitable until 2024.

UBS, on the other hand, made a $7.6 billion profit in 2022.

Any agreement may result in significant job losses.

Credit Suisse is a domestic bank with 95 branches that also has a global investment banking operation and manages the assets of wealthy clients.

Credit Suisse had a global workforce of 50,480 people at the end of last year, including 16,700 in Switzerland, though 9,000 jobs were to be cut, according to Swiss broadcaster SRF.