March 21, 2023

Date: March 19, 2023 Time: 00:17:39

The Swiss authorities and Credit Suisse and UBS are racing against the clock to try to close a rescue plan as soon as possible; if possible throughout the afternoon-night of this Saturday. One of the most complicated issues during the negotiations would be closing certain liability agreements with Switzerland. According to Bloomberg, UBS is concerned about the medium-term consequences of an operation that was initially unwanted and the lack of visibility into the “guts” of its compatriot’s investment banking business. In this sense, he would have asked the Swiss government to assume possible losses and also hypothetical legal responsibilities that could arise after the fact.

In fact, the legal consequences are one of the unresolved issues in the resolutions that have been carried out in the past and one of the examples is the rescue of Banco Popular by Banco Santander. The European system did not define the legal responsibilities of the buyer and Santander has inherited an extension wave of lawsuits; an experience that UBS does not seem to want to repeat, which is why it would be trying to negotiate with the Swiss authorities.

The bank, in principle, according to Bloomberg, would only be really interested in Credit Suisse’s wealth management business – other entities such as Deutsche Bank also see it as attractive – and not in the banking business. Although UBS would prefer not to say anything about the negotiations, one of the problems would be that it would be concerned about the risks it may encounter once it takes control within Credit Suisse’s investment banking area.

The now buyer and until recently a competitor will be judged harshly on the stock market this Monday and the price of UBS has already been affected by the crisis in his compatriot. Last week, in the midst of a Credit Suisse storm, UBS dumped more than 11% on the stock market. 60,000 million euros of capitalization for the barely more than 7,500 million of Credit Suisse- is a relevant absorption operation, which much is concentrated in a single bank.

Together they would control deposits for more than 726,000 million (490,000 from UBS and 236,000 from Credit Suisse) and their volume of joint assets would reach 1.5 trillion euros. A true giant, created from the merger of two systemic banks, whose first obligation would be to recover the confidence of the market.

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