UBS has offered to buy Credit Suisse for one billion dollars in an all-share-based transaction. The offering price is well below Credit Suisse's closing price on Friday.

A deal for UBS to take over Credit Suisse is unfolding between the two largest banks in Switzerland and could be signed as early as Sunday evening. The Federal Reserve is said to have approved the deal as well, according to a story in the «Financial Times» (behind paywall) citing people close to the matter. 

UBS is said to have offered one billion dollars for the beleaguered Swiss lender. In order for the deal to go through quickly, Swiss authorities are planning a change to relevant laws to bypass a shareholder vote on the transaction.

Deal Before Market Opens

Normally a six-week consultation period would be required for UBS stockholders This would ensure the deal is concluded before the market opens Monday morning.

Credit Suisse has a market capitalization of a little bit more than 7 billion francs ($7.6 billion) and closed trading on Friday at 1.86 francs. The price offered by UBS amounts to 25 centimes per share which would be paid in UBS stock. 

Behind the Scenes

Saturday evening, the cabinet of the Swiss government met at the finance ministry in Bern and was presented with a series of proposals from the Swiss National Bank, the Swiss Financial Market Supervisory Authority (Finma), members of the government, and banking industry representatives.

UBS insisted on a material amendment that would invalidate the deal if its credit default spreads increased by 100 basis points or more, according to the «FT». It said there is no guarantee that the terms would remain unchanged or that an agreement would be reached.

The report went on to say there has been little contact between the two banks and terms have been heavily influenced by the SNB and Finma.

Credit Suisse Investment Bank

According to a separate story from «Bloomberg» (behind paywall), one sticking point in the talks is Credit Suisse's investment banking and trading operations.

UBS is said to have voiced concerns over balance sheet risk and the investment banking unit, according to people familiar.

Fed Seal of Approval

The US Federal Reserve had given its approval to the transaction, it was further learned. The Bank of England has also given its approval, it was earlier reported.