UBS Group doubles offer and acquires Credit Suisse for $2B

UBS Group doubled down on its initial offer and agreed to buy competitor Credit Suisse for nearly $2 billion on March 19, in a landmark deal for Switzerland's two largest banks, the Financial Times reported.

UBS previously tabled a $1 billion offer on March 18, but Credit Suisse's board rejected the deal, FT sources said. The $1 billion offer was a sizable discount to the bank's market value on March 17 of nearly $8 billion, according to Companies Market Cap data.

To seal the deal, Swiss authorities also agreed to change the country's regulations to circumvent shareholder voting and announce the deal over the weekend, before markets open.

Additionally, as part of the agreement, the Swiss National Bank (SNB) has committed to providing over $100 billion in liquidity line to USB. According to the FT, the deal was heavily influenced by the SNB and the Swiss Financial Market Supervisory Authority (FINMA). Regulators in the United States and Europe are said to have approved the deal, with coordinated statements to be released later on Sunday.

UBS takes over Credit Suisse pic.twitter.com/XF8LEZFXlx

— David Gura (@davidgura) March 19, 2023

swiss authorities considered alternatives to Credit Suisse in case the deal with UBS fell through over the weekend, including a full or partial nationalization of the bank as an emergency option.

Credit Suisse's bailout plan would also include losses for bondholders. The move sparked concern from European regulators that it would undermine investor confidence in the European financial sector.

UBS and Credit Suisse have been in talks with regulators since March 15, after Credit Suisse's largest shareholder, the Saudi National Bank, said during an interview that it would not increase its investment in the Swiss bank due to regulations. The comments raised concerns about the bank's ability to turn a profit, raising fears about potential shareholder financing.

Credit Suisse was founded in 1856 to finance the expansion of the Swiss railways. It was considered the second largest bank in the country.