The UBS Group has agreed to help its ailing competitor Credit Suisse with $3.25 Billion as part of an “Emergency Ordinance” for preventing financial market instability.
In its previous reports published by Financial Times, UBS showed interest in buying Credit Suisse for around $2 Billion. However, the most recent statement from UBS says that the total consideration for the deal would be around $3.25 Billion which is still seen as a deeply discounted deal for Credit Suisse.
In addition the UBS Chairman, Colm Kelleher clarifies that this acquisition is merely an emergency rescue and they have already structured a transaction with the intention to preserve the leftover in the business by limiting their downside exposure. To execute this deal the Swiss Authorities have also made changes in the country’s regulations of bypassing a shareholder vote.
UBS Group also shared that besides Swiss National Bank this acquisition has full support from the Swiss Federal Department of Finance and the Swiss Financial Market Supervisory Authority (FINMA) too. Furthermore, the plans to rescue Credit Suisse also include losses borne by bondholders and promoting concerns shown by European regulators in relation to the undermining confidence of the investor in European‘s financial sector.
The Swiss authorities have put UBS and Credit Suisse put into talks Credit Suisse’s largest shareholder i.e Saudi National Bank declined the acquisition plan for Credit Suisse. The latter stated that the acquisition would not benefit its investment in the Swiss bank due to pre-defined regulations. Thus, the deal for “Emergency Rescue” by UBS for Credit Suisse is expected to take place towards the end of this week.