(Bloomberg) — UBS Group AG is exploring the possibility of acquiring all or part of Credit Suisse Group AG at the request of Swiss regulators, according to people with knowledge of the matter.
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The people said Swiss officials are pressing UBS to look at different ways Credit Suisse can be involved with the resolution, asking not to be identified to describe private discussions. The people said discussions were on and it was not clear whether a deal would happen.
According to the Financial Times, the boards of Switzerland's top two banks are expected to meet separately later this week to weigh the idea of a combination, negotiated by the Swiss National Bank and regulator FINMA, which first floated the idea on Friday. Notice of discussion was given.
Spokespeople for UBS and Credit Suisse declined to comment.
The goal is for an announcement of a deal between the two banks by Sunday evening, according to a person familiar with the matter, who asked not to be identified discussing the talks. However, the situation remains fluid and may change.
A government-brokered deal will address a rout at Credit Suisse that sent shock waves through the global financial system this week when panicked investors dumped their shares and bonds following the collapse of several smaller US lenders. A liquidity backstop by the Swiss Central Bank briefly halted the decline, but the market drama carries the risk that clients or counterparties will continue to flee, with potential implications for the wider industry.
Bloomberg reported earlier this week that the government, the central bank and FINMA are in close contact to discuss further ways to stabilize Credit Suisse. Ideas floated include spin-off of the bank's Swiss unit and an orchestrated tie-up with UBS, people familiar with the matter said earlier. Executives at UBS and Credit Suisse were opposed to such a systematic combination, people familiar with the matter said earlier this week.
UBS would prefer to focus on its own wealth-focused standalone strategy and is reluctant to take on risks related to Credit Suisse, said the people, who asked not to be privy to the discussions. He said Credit Suisse is seeking time to see its turnaround after securing a $54 billion credit line from the central bank.
Credit Suisse's market value has fallen from a 2007 peak of over 100 billion francs to about 7.4 billion Swiss francs ($8 billion). UBS has a market value of 60 billion francs.
Credit Suisse, which traces its roots to 1856, has been hit by a series of implosions, scandals, leadership changes and legal issues in recent years. The company's losses of 7.3 billion francs last year wiped out the profits of the previous decade.
Clients pulled more than $100 billion in assets in the last three months of last year as concerns grew about its financial health, and outflows continued even after it tapped shareholders in raising 4 billion francs of capital.
–With assistance from Marion Haltermeyer, Gillian Tan and Steven Aarons.
(Update in the fifth paragraph with the goal of announcing a deal by Sunday.)
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