UBS to buy Credit Suisse for over $2B, report says

Swiss leaders are holding a news conference Sunday night following several media reports that banking giant UBS is believed to be in talks to acquire its rival Credit Suisse.

Swiss leaders are holding a news conference Sunday night following several media reports that banking giant UBS is believed to be in talks to acquire its smaller rival Credit Suisse in an effort to avoid further market-shaking turmoil in global banking.

UBS UBSG.S has agreed to buy Credit Suisse after increasing its offer to more than $2 billion, the Financial Times reported on Sunday.

The Federal Council, the seven-member governing body that includes Swiss President Alain Berset, is expected to announce that UBS is acquiring Credit Suisse in a potential deal brokered by the Swiss government.

Sunday’s news conference follows the collapse of two large U.S. banks last week that spurred a frantic, broad response from the U.S. government to prevent any further bank panics. Still, global financial markets have been on edge since Credit Suisse’s share price began plummeting this week.

The deal was announced just days after the 167-year-old Credit Suisse received a $50 billion (54 million Swiss francs) loan from the Swiss National Bank, which briefly caused a rally in the bank’s stock price. Yet the move did not appear to be enough to stem an outflow of deposits, according to news reports.

Still, many of Credit Suisse’s problems are unique and do not overlap with the weaknesses that brought down Silicon Valley Bank and Signature Bank, whose failures led to a significant rescue effort by the Federal Deposit Insurance Corporation and the Federal Reserve. As a result, their downfall does not necessarily signal the start of a financial crisis similar to what occurred in 2008.

The deal caps a highly volatile week for Credit Suisse, most notably on Wednesday when its shares plunged to a record low after its largest investor, the Saudi National Bank, said it wouldn’t invest any more money into the bank to avoid tripping regulations that would kick in if its stake rose about 10%.

On Friday, shares dropped eight per cent to close at 1.86 francs ($2) on the Swiss exchange. The stock has seen a long downward slide: It traded at more than 80 francs in 2007.