According to the “Financial Times”, executives of financial institutions will meet in the coming days to reach an agreement
Swiss bank UBS is in talks to take over all or part of Credit Suisse. Executives from the two monetary institutions will meet in the coming days to discuss a possible deal. The information is from the newspaper Financial Times.
The Swiss Central Bank and Finma (Swiss Financial Market Supervisory Authority) will participate in the negotiations with the aim of restoring investor confidence in the country’s banking sector.
To reach a consensus, the executives will evaluate the possible legal impacts of a possible merger. UBS, in turn, is also analyzing the possible risks of incorporating Credit Suisse into its own business.
The intention is for UBS and Credit Suisse to reach a decision to overcome the crisis before the markets open after the weekend, on Monday (20.Mar). However, there is also no guarantee that the institutions will reach an agreement.
Still according to Financial TimesSwiss financial market officials told US and UK finance officials that merging the banks is a priority initiative to restore confidence in Credit Suisse.
O Financial Times said he tried to contact Credit Suisse, UBS, the Fed (US central bank), the Bank of England and the Swiss Central Bank, however, he did not get a response from them.
UNDERSTAND THE CASE
On Tuesday (14.Mar), Credit Suisse Group AG informed have identified “material weaknesses” in your financial reports for the past 2 years. The announcement was made in the 2022 annual report.
On Wednesday (March 15), the bank’s shares fell by up to 30.8% at the day’s low and led to the fall of the global banking sector. In Brazil, the 5 main financial institutions on the B3 (São Paulo Stock Exchange) lost BRL 35.7 billion in market value in 4 trading sessions from March 8 to 14.
The case of the European bank and the consequences of the bankruptcy of 2 North American banks, Silicon Valley Bank and Signature Bank, caused turmoil in the financial market.
Hours later, the Financial Times reported that investment bank executives held meetings with representatives of the Swiss Central Bank and Finma. Also according to the British newspaper, Credit Suisse asked the monetary authorities for a public statement of support.
Later, the Swiss Central Bank stated that would provide liquidity support to Credit Suisse. The statements were given in a joint announcement with Finma.
“(O) Credit Suisse meets capital and liquidity requirements imposed on systemically important banks. If necessary, the SNB (Swiss National Bank) will provide the CS (Credit Suisse) liquidity”said the note.
In response, Credit Suisse announced on Wednesday night (March 15) that it must take a loan from the Swiss Central Bank of US$ 54 billion (about 50 billion Swiss francs) through a covered loan facility and a short-term liquidity facility.
On Thursday (16.Mar), Credit Suisse shares went up 19.15%. The high occurred 1 day after registering a sharp drop of 24.11%.
Also on Thursday (16.Mar), the Reuters informed that American shareholders of Credit Suisse sued the Swiss investment bank. They allege that the institution committed fraud by concealing information about the bank’s finances.
The lawsuit was filed in a federal court in the city of Camden, in the State of New Jersey. Credit Suisse Chief Executive Ulrich Koerner and Chairman Axel Lehmann are among the defendants.
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