Exclusive-UBS seeks about $6 billion in government guarantees for Credit Suisse deal -source

UBS Group AG is seeking government guarantees worth about $6 billion for a potential takeover of Credit Suisse Group AG, according to an insider who spoke to Reuters recently. The guarantees would encompass the cost of winding down sections of Credit Suisse and potential litigation charges, and while the talks are still ongoing and the figure could fluctuate, the interest is evidently present.

A second source confirmed the guarantees for winding down parts of Credit Suisse’s business and the accompanying litigation expenses without specifying the $6 billion figure.

However, talks to resolve the crisis of confidence in Credit Suisse are encountering significant obstacles, and should the two banks combine, around 10,000 jobs would likely have to be cut, the insider said. Swiss regulators are rushing to provide a solution for Credit Suisse before Monday, and while talks have not concluded, the complexities of joining two behemoth banks suggest that discussions may continue through Sunday. Credit Suisse, UBS, and the Swiss government declined to comment.

On Friday, Credit Suisse was valued at the equivalent of roughly $8 billion. Deutsche Bank AG is also considering acquiring parts of Credit Suisse, the same insider stated. However, the source said that any agreement with the German lender could take more time. A Deutsche Bank spokesperson declined to comment, but Bloomberg previously reported the bank’s interest in portions of Credit Suisse.

“Any potential deal will be littered with complexity, litigation protections being one, with the situation to remain fluid but with clarity necessary before Monday,” Thomas Hallett, a KBW analyst, said in a note to clients on Saturday.

(Additional reporting by John Revill; Editing by Elisa Martinuzzi, Paritosh Bansal, Peter Graff)

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