Credit Suisse nationalisation considered by Swiss authorities amid UBS takeover complexities


19th March 2023 – (Zurich) Swiss authorities are reportedly exploring the possibility of fully or partially nationalising Credit Suisse Group AG, as an alternative to a takeover bid by UBS Group AG. Individuals privy to the matter stated that the country is currently contemplating either acquiring the bank entirely or holding a significant equity stake, in case the UBS takeover collapses due to the complexities involved in organizing the deal within the short timeframe available.

The matter remains dynamic, and there is a possibility that the situation may change as authorities strive to reach a resolution for the bank by the time Asian markets open, which is late evening in Europe, according to the sources who requested anonymity due to the private nature of the matter.

When contacted by foreign media for comment, the Swiss finance ministry declined to provide a statement.

There are multiple complications involved in UBS’s bid to acquire Credit Suisse, which includes a government backstop that would cover probable legal and other losses. Furthermore, the larger rival has shown reluctance to take on Credit Suisse’s investment bank, as stated by a report from Bloomberg on Saturday.

Sources disclosed that UBS is urging the government to bear some of the legal costs and potential future losses in the event of a takeover, with some estimates putting the figure at around $6 billion. However, the smaller Swiss bank believes that UBS’s offer of approximately US$1 billion for Credit Suisse is too low.

According to a report by Bloomberg, the complexities surrounding a potential takeover of Credit Suisse by UBS has prompted the Swiss authorities to consider alternative options, including nationalisation.

Credit Suisse has been going through a challenging period following a series of scandals that have damaged the bank’s reputation and financial standing. Earlier, the bank warned of significant losses related to the collapse of Archegos Capital Management, a hedge fund client. Furthermore, Credit Suisse has also been embroiled in the fallout from the Greensill Capital scandal, which led to significant losses and forced the bank to suspend US$10 billion in funds linked to the collapsed finance firm.

The matter remains fluid, with the authorities striving to reach a resolution for the bank before markets open tomorrow.