Crunch time for Credit Suisse talks as UBS seeks Swiss assurances

Geneva, March 19 (BNA): Talks about bailing out Credit Suisse (CSGN.S) kicked off Sunday after UBS AG (UBSG.S) sought $6 billion from the Swiss government to cover costs if it wanted to buy out its struggling rival, a person said. Familiar with the conversations.

Authorities are scrambling to resolve the crisis of confidence in 167-year-old Credit Suisse, the world’s most important bank caught in the turmoil caused by the collapse of US lenders Silicon Valley and Signature Bank over the past week.

While regulators want a solution before markets reopen on Monday, one source warned that the talks face significant hurdles, and that 10,000 jobs may have to be cut if the two banks meet, Reuters reported.

Two people told Reuters that the guarantees UBS is seeking will cover the cost of terminating parts of Credit Suisse and potential litigation fees.

Credit Suisse, UBS and the Swiss government declined to comment.

The frantic weekend negotiations come on the heels of a tough week for bank stocks and efforts in Europe and the US to support the sector. US President Joe Biden’s administration moved to shore up consumer deposits while the Swiss central bank lent billions to Credit Suisse to stabilize its shaky balance sheet.

Two informed sources said that UBS is under pressure from the Swiss authorities to control its local competitor to control the crisis. The plan could lead to the breakup of Credit Suisse’s Swiss business.

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The Financial Times, citing two people familiar with the situation, reports that Switzerland is preparing to use emergency measures to speed up the deal.

Bloomberg News reported, citing sources familiar with the matter, that US authorities are engaged in working with their Swiss counterparts to help broker a deal.

A source told Reuters that Warren Buffett of Berkshire Hathaway Inc (BRKa.N) has held discussions with senior Biden administration officials about the banking crisis.

The White House and the US Treasury Department declined to comment.

A source familiar with the matter said UK Finance Minister Jeremy Hunt and Bank of England Governor Andrew Bailey were in regular contact this weekend about the fate of Credit Suisse. Spokesmen for the UK Treasury and the Bank of England’s prudential regulator, which oversees lenders, declined to comment.


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