UBS Group AG (NYSE:UBS) is exploring options to take over all or part of Credit Suisse Group AG (NYSE:CS) but has asked the Swiss government's support to cover future risks if it were to buy the bank, according to Bloomberg.
The publication reported that UBS has discussed the government's potential handling of certain legal costs and potential losses in any deal.
In a possible takeover scenario, UBS would acquire Credit Suisse to obtain the latter's wealth and asset management units while divesting the latter's investment banking division, people familiar with the matter told Bloomberg. Sources also said that talks around the fate of Credit Suisse's profitable Swiss universal bank unit are ongoing.
The board of both banks are set to meet separately over the weekend to consider a takeover, following the financial crisis faced by Credit Suisse, reported the Financial Times, adding that UBS has a market value of $56.6 billion. Shares in Credit Suisse, on the other hand, closed on Friday with a value of $8 billion. Both banks, along with regulators, are aiming to hash out a deal as soon as Saturday evening, Bloomberg reported.
Earlier, Bloomberg also reported that UBS executives had opposed an arranged combination with Credit Suisse because they wanted to focus on UBS' wealth-centric strategy. In addition, they were reluctant to take on risks related to Credit Suisse. Credit Suisse had previously requested the support of Swiss National Bank after losing almost 30% of its stock value.
Deutsche Bank AG (NYSE:DB) is also monitoring Credit Suisse's situation to acquire certain businesses, according to Bloomberg. The German multinational bank's deliberations are part of a larger effort to assess potential fallout from Credit Suisse's complication.
Earlier in the week, Credit Suisse released its delayed FY22 annual report, which identified "material weaknesses" in its internal controls over financial reporting. At the end of last year, the bank had $1.3 billion in legal provisions and saw reasonably possible losses of another $1.3 billion. It also has several outstanding lawsuits and regulatory probes, according to Bloomberg.
Meanwhile, BlackRock (NYSE:BLK) has denied the reports that it is considering a bid for Credit Suisse.
"BlackRock is not participating in any plans to acquire all or any part of Credit Suisse and has no interest in doing so," CNBC quoted a company spokesperson saying.
Earlier, the Financial Times had reported that BlackRock was working on a bid to acquire the Swiss bank.
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