UBS is in talks to take over all or part of Credit Suisse, the Financial Times reported, citing multiple people familiar involved in the discussions.
According to the report, the Swiss National Bank and Finma, its regulator, are behind the negotiations, which are aimed at boosting confidence in the Swiss banking sector.
Earlier this week, the embattled Credit Suisse said it would borrow as much as 50 billion Swiss francs (or nearly $54 billion) from the Swiss National Bank. But even with that move, Credit Suisse shares have continued to fall. Credit Suisse shares closed lower by nearly 7% on Friday, but are down 24% for the week.
Swiss regulators have told U.S. and U.K. regulators that a merger of the two banks was their "plan A," the people told the Financial Times. But there continue to be other options that may be considered, they said.
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The paper said UBS declined to comment, and Credit Suisse wasn't immediately available when the FT reached out.
The global banking sector has been under increasing pressure in the wake of Silicon Valley Bank's failure last week. Since that event, crypto-focused Signature Bank was also closed by regulators and regional bank shares have lost millions in market cap. Among the stocks suffering the biggest losses is First Republic Bank, which tanked nearly 33% on Friday.
First Republic's losses were particularly unnerving as they came after 11 other banks pledged to deposit $30 billion at the bank for at least 120 days. That rescue was an attempt by the largest U.S. banks to shore up confidence in the financial sector.
Money Report
Credit Suisse began to tumble earlier this week when it was revealed that its biggest backer, Saudi National Bank, would not be able to provide additional financial support.
On Wednesday, Swiss National Bank said it would provide Credit Suisse with additional liquidity and the Swiss Financial Market Supervisory Authority issued a statement saying the bank met "capital and liquidity requirements." However, the unease in the banking sector is continuing.
The pressure to combine UBS and Credit Suisse recalls the 2008 financial crisis when Bear Stearns was sold to JPMorgan in a fire-sale deal. Despite the seemingly low price of that transaction, JPMorgan's Jamie Dimon has said he regretted the decision. That lesson is likely being weighed by UBS executives and its board as part of the reported negotiations.
