Credit Suisse to be bought by UBS for about $2 billion

UBS has agreed to buy Credit Suisse for over $2 billion following record-low shares and concerns about the resilience of financial institutions, caused by the collapse of Silicon Valley Bank.

According to three individuals close to the deal who spoke with the New York Times on Sunday, this amount is higher than the initial reported figure of $1 billion. Despite a nearly $54 billion bailout from the Swiss National Bank, Credit Suisse was unable to survive as the bank had been grappling with years of scandals and instability.

Credit Suisse Shares Drop to Record Lows for Second Consecutive Day

Following a two-day, record-low decline in shares, Credit Suisse’s shares rose by as much as 33% before settling at a 25% decline on March 16.

Under the proposed agreement, UBS will pay only a fraction of the $9.5 billion value estimated for Credit Suisse on Friday. According to the Financial Times, the deal is expected to be signed by Sunday night.

The Swiss government is expected to modify the country’s laws to expedite the transaction, such as abolishing the six-week consultation period with shareholders before approving a deal, which will enable the financial institutions to bypass the need for a shareholder vote on the acquisition.

Although Credit Suisse’s collapse is not directly linked to the Silicon Valley Bank’s failure, the banking failure across the Atlantic intensified the drop in the Swiss bank’s stocks due to investor fears.

Click here to read more from the Washington Examiner.

Over a week ago, the California-based bank suffered a negative cash balance of nearly a billion dollars, leading regulators to shut it down on March 9. The Federal Reserve, Justice Department, and Securities and Exchange Commission are investigating and examining the bank’s failure.

Last Thursday, Treasury Secretary Janet Yellen testified before the Senate Finance Committee, reassuring Congress that the U.S. banking system “remains sound,” despite a week of financial turmoil.