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| UBS reaches an agreement to acquire Credit Suisse for over $2 billion |
According to the Financial Times, Switzerland's largest bank UBS has reached an agreement to acquire the country's second-largest bank Credit Suisse.
UBS will pay over $2 billion for Credit Suisse, offering 0.50 Swiss francs per share in its own stock. Credit Suisse shares closed at 1.86 Swiss francs on Friday, and it was previously reported that UBS had offered 0.25 Swiss francs per share earlier in the day.
Swiss authorities will need to make changes to regulations to allow the agreement between UBS and Credit Suisse to proceed, and shareholders will need to vote on the deal before it can be finalized. Vincent Kaufmann, CEO of the Ethos Foundation, which represents Swiss pension funds with 5% and 3% stakes in UBS and Credit Suisse respectively, said that bypassing the shareholder vote would not please UBS shareholders and that the move was unprecedented, showing how bad the situation was.
The agreement between the two banks is expected to be signed tonight. As part of the deal, the Swiss National Bank will reportedly provide UBS with around $100 billion in liquidity.
UBS's acquisition of Credit Suisse would consolidate its position as Switzerland's largest bank, with a combined market share of almost 50%. However, it remains to be seen what impact the acquisition will have on the banking sector and the wider economy.
