The financial world was shaken by the news that Credit Suisse was on the brink of collapse, leading to the Swiss bank’s acquisition by UBS. The deal, which is expected to be signed soon, is worth up to one billion dollars and will be entirely in shares.
According to reports, the Swiss authorities are preparing to change the law to bypass the required shareholder vote on the deal, with the goal of approving it before Monday. While the talks are proceeding at a fast pace, the terms of the deal are yet to be finalized, and close sources have expressed concerns about the deal’s fairness to Credit Suisse’s shareholders.
The acquisition comes at a very low price compared to the closing price of the Credit Suisse share on Friday. UBS offered its shares at a price of CHF0.25 ($0.27) per share for each Credit Suisse share, while Credit Suisse shares closed on Friday at a price of CHF1.86.
Credit Suisse has been facing a series of losses and scandals in recent years, which has led to a significant capital flight. The bank recorded a net annual loss of CHF7.3 billion in 2022, and it is expected to suffer another significant loss in 2023 as well. The situation worsened last week when Credit Suisse stock recorded its sharpest weekly drop since the outbreak of the Corona epidemic, despite the announcement that it will receive a credit line of up to CHF50 billion ($54 billion) from the Swiss National Bank.
The acquisition by UBS is expected to provide an answer to the Credit Suisse crisis, which sent shock waves throughout the global financial system. However, the deal’s fairness to Credit Suisse’s shareholders and the circumvention of customary corporate governance rules have been a cause for concern among some experts.
Regardless of the final terms, UBS’ acquisition of Credit Suisse will provide a solution to Credit Suisse’s ongoing crisis. A successful conclusion to this saga is expected to restore trust not only in Swiss banks, but in the entire banking system, which has been under pressure since the collapse of SVB and Signature banks earlier this month.
According to WSJ, purchasing Credit Suisse would provide UBS with valuable assets such as investment bank and wealth management clients in Asia and the Middle East, as well as operations in New York, London, and Singapore.
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