The Swiss federal government held consultations this evening on the situation at Bank Credit Suisse, Swiss media reported. According to the Financial Times, the government in Bern is preparing measures so that the ailing company can be taken over by its Swiss counterpart in the industry, UBS.
Credit Suisse is in big trouble and lost a quarter of its value last week. Credit Suisse has borrowed over 50 billion euros from the Swiss central bank to stay afloat. The bank ran into trouble when the American banks Silicon Valley Bank and Signature Bank collapsed. The bankruptcy of these banks and the problems in Credit Suisse caused great turmoil in the financial markets.
Shares of banks, insurance companies and other financial institutions in particular fell sharply last week. Dutch companies such as Aegon, ABN Amro and ING also lost value last week.
Probably 10,000 jobs gone
According to sources from international news outlets, UBS is under strong pressure from the Swiss authorities to take over Credit Suisse to end the crisis. The Swiss government can guarantee the takeover. Reuters news agency reported that UBS is seeking government guarantees of approximately US$6 billion to acquire Credit Suisse. The takeover could cost 10,000 jobs.
It is clear that a decision has not yet been made. Swiss authorities are seeking a solution for Credit Suisse before exchanges reopen on Monday, but the merger between the two banking giants is too complex. That’s probably why there will be more discussion tomorrow.
Business news agency Bloomberg reported that US authorities also intervened in the possible takeover. Both UBS and Credit Suisse are active in the USA.
German bank
It is not yet clear whether Credit Suisse will be fully acquired or other companies will take over parts of the group. Deutsche Bank is nominated by Bloomberg to become a stakeholder in the investment industry. Earlier this morning, it was rumored that American investment giant BlackRock wanted to buy the bank but turned it down.
Credit Suisse has been experiencing problems for some time, including with investments that are losing money. It was also revealed earlier this week that there were shortcomings in billing. Last year, the company lost 7.4 billion euros. UBS, headed by Dutch Ralph Hamers, just made a profit of 7 billion euros.
The problems stem in part from the collapse of the US Silicon Valley bank. This caused great unrest in Silicon Valley:
Source: NOS
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
