Mar 19 (Reuters) – UBS (UBSG.S) has agreed to buy Swiss banking giant Credit Suisse (CSGN.S) after increasing its bid to more than $2 billion, the Financial Times reported on Sunday , as authorities tried to stave off turmoil when markets reopen.
After a brutal week that saw the second and third largest US bank failures in history, officials sought to bail out the 167-year-old bank, which is among the world’s largest money managers. As one of 30 global banks considered systemically important, any deal for Credit Suisse could saturate global financial markets.
At least two major banks in Europe are assessing contagion scenarios that could potentially spread to the region’s banking sector and expect the Federal Reserve and European Central Bank to step in with stronger signals of support, two senior officials with knowledge of the discussions told Reuters.
A person with knowledge of the talks previously told Reuters that UBS is asking the Swiss government for $6 billion as part of a possible purchase of its rival. The guarantees would cover the cost of winding up parts of Credit Suisse and potential litigation costs.
A source previously said the talks have encountered significant obstacles and 10,000 jobs may have to be cut if the two banks are merged. The Swiss Association of Bank Employees called on Sunday for the immediate creation of a task force to deal with the threat to jobs.
Swiss broadcaster SRF and other media reported that the government would hold an “important” press conference later on Sunday. They did not give any further details.
Credit Suisse shares lost a quarter of their value last week. The bank has been forced to tap $54 billion in central bank funds to recover from scandals that have eroded investor and customer confidence.
Reporting by Stefania Spezzati, Oliver Hirt and John O’Donnell; Additional reporting by Reuters offices; Writing from Lincoln Feast, Conor Humphries; Edited by William Mallard, Kirsten Donovan, Barbara Lewis Hugh Lawson and David Holmes
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