First, a no. But now – a possible yes. The two largest Swiss banks, UBS and Credit Suisse, are ostensibly talking about a merger this weekend given the existential crisis the latter faces. Domestic regulators appear to be striving for a «simple and straightforward» solution by Monday.
Switzerland's largest bank, UBS, and its second-ranked counterpart, Credit Suisse, are apparently considering how and whether to merge. That is at least the situation according to the UK's «Financial Times» (behind paywall) in an article published overnight.
The newspaper, citing sources familiar with the discussions, indicated that the negotiations appear to be an attempt to «shore up confidence» in the domestic financial sector while preventing a further collapse in sentiment related to Credit Suisse.
US and UK Regulators Informed
Credit Suisse shares fell precipitously last week after the 50 billion francs ($54 billion) in short-term facilities provided by the SNB only managed to temporarily stabilize the bank's share price. Yesterday, on Friday, the share price fell an additional 8 percent to 1.86 francs. In after-market trading, however, the share managed to post a 9 percent recovery.
The sources told the «FT» that Swiss regulators informed their US and UK counterparts about the ongoing talks and that a merger between the two was seen as a so-called «plan A» although a number of different possibilities were still under consideration.
More on Monday
According to the sources, the SNB is aiming for a «simple and straightforward» solution before financial markets resume trading on Monday, the FT indicated.
All of those potentially involved declined to comment and the newspaper indicated that the boards of both banks were meeting separately over the weekend to discuss the situation, the «FT» said, citing a number of people briefed on the talks. The newspaper added that any deal would be «Europe's most consequential banking combination since the financial crisis».
Different Solutions
It would also create one of the largest systemically relevant institutions in Europe although a full merger remains difficult to envision at this time for numerous reasons, including possible regulatory hurdles internationally.
Other solutions possibly being considered could be further split-ups of Credit Suisse's business or an IPO of the domestic business at the same time that the wealth management and asset management businesses are sold to UBS or another interested party.
