After the United States, Europe’s banks have been hit hard. Credit Suisse Bank is one of Switzerland’s financial institutions on the brink of disaster. Switzerland’s largest bank UBS AG has come forward to acquire this financial institution. However, the company has sought a guarantee of 6 billion dollars from the government to buy this bank.

A person familiar with the talks said the two sides were moving towards a deal together to restore customer confidence in the Swiss bank.

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The collapse of US lenders Silicon Valley Bank and Signature Bank last week has sparked turmoil in the banking sector. The 167-year-old Credit Suisse bank is also at risk due to that instability.

UBS is seeking a $6 billion government guarantee, two people familiar with the matter told Reuters.

Talks to resolve Credit Suisse’s crisis of confidence are facing significant hurdles and up to 10,000 jobs could be cut if the two banks merge, a source has warned.

Swiss regulators are scrambling to find a solution for Credit Suisse before stock markets reopen on Monday. It is said that the discussion will continue on Sunday.

However, Credit Suisse, UBS and the Swiss government are reluctant to comment.

Saudi National Bank is the largest shareholder of this institution. After the Saudi National Bank refused to provide new funds, the share price of Credit Suisse Bank fell by 30 percent in one day on Wednesday. Earlier on March 16, Credit Suisse said it would borrow $5.4 billion from the central bank to boost liquidity.

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On March 9, Credit Suisse announced a delay in publishing its annual report after a last-minute phone call from America’s main financial regulator, the Securities and Exchange Commission. As a result, ‘material weaknesses’ in the firm’s financial-reporting system are less likely to reassure investors.

One option for Credit Suisse is to tie-up with UBS. It is reported that the central bank of Switzerland has also advised Credit Suisse to merge with UBS AG. However, the government has no authority to compel UBS in this regard.

Source: Reuters

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