Credit Suisse, UBS, and their key regulators are negotiating a deal for the merger of two largest banks in Switzerland, according to the Financial Times on Saturday.
According to the Wall Street Journal, the deal could be completed Sunday.
One person said that regulators have offered to waive the requirement for customary shareholder votes in order to speed up the sale. According to reports, discussions moved quickly and there was still a sticking point regarding who would own Credit Suisse's large Swiss retail arm.
International counterparts have been told by Finma and the Swiss National Bank that they consider a deal with UBS to be the best option to prevent a collapse of confidence in Credit Suisse CSGN (-8.01% CS), -6.94%). According to the report, deposits outflows from UBS topped Sfr10bn ($10.8bn) in a single day last week due to increasing fears about its health.
This weekend, the boards of both banks will meet. The US, UK, and Switzerland's top regulators of Credit Suisse are examining the legal structure and concessions UBS UBSG (-1.16% UBS) has requested.
UBS would like to be allowed to phase-in any demands it might face under the global capital rules for the largest banks. One person said that UBS also requested an indemnity agreement or government agreement to pay future legal expenses.
UBS, Credit Suisse and the Federal Reserve declined comment. Finma and Bank of England didn't immediately respond to our requests for comment.
This deal is possible days after Credit Suisse was denied an emergency credit line of SFr50bn ($54bn).
It failed to stop a slide in the share price. After its largest investor stopped providing capital, and after its chair acknowledged that a exodus from wealth management clients was continuing, it has fallen to new records.
American depositary receipts of Credit Suisse CS rose more than 7% during the extended session Friday after the close of the regular trading day with a 7% drop. ADRs are down 24% this week, while the S&P 500 index has seen a 1.4% weekly gain. SPX, -1.1%0% Zurich shares traded had their worst week since 2008's financial crisis.
The potential takeover is a reflection of the stark divergence in the fortunes of the two banks.
UBS shares have risen by about 120 percent over the last three years while its smaller counterparts have fallen by around 70%. UBS' market capitalisation is $56.6bn. Credit Suisse closes trading Friday with a value $8bn. UBS made $7.6 billion in profit in 2022 while Credit Suisse lost $7.9bn, effectively wiping out the entire previous decade of earnings.
Bloomberg News reported earlier that Deutsche Bank AG DBK (-1.53%) was watching the Credit Suisse situation in order to determine if there were any opportunities to acquire specific businesses.
The Financial Times reported that US investment giant BlackRock BLK (-0.04%) had developed a rival approach, evaluated several options, and spoken to potential investors. According to Bloomberg New s, BlackRock has denied that it is working on a rival bid for Credit Suisse Group AG.
UBS and Credit Suisse could merge to create the largest global systemically important financial institution in Europe. UBS's total assets are $1.1tn, while Credit Suisse's is $575bn.