UBS offers to buy Credit Suisse for up to $1 billion, the Financial Times reports

A sale to UBS, which could be signed as early as tonight, values ​​Credit Suisse at about $7 billion less than its market value at Friday’s close. It comes after Credit Suisse shares posted their worst weekly decline since the start of the coronavirus pandemic. This despite an announcement that it will take a loan of up to 50 billion Swiss francs ($54 billion) from the Swiss central bank.

A customer walks to an automated teller machine (ATM) inside a Credit Suisse Group AG bank branch in Geneva, Switzerland, Thursday, Sept. 1, 2022.

Jose Cendón | Bloomberg | Getty Images

Swiss banking giant UBS offered on Sunday to buy rival Credit Suisse for up to $1 billion, according to the Financial Times, citing four people with direct knowledge of the situation.

The deal, which the FT said could be signed as early as Sunday evening, values ​​Credit Suisse at about $7 billion less than its market value at Friday’s close.

The FT said UBS had offered a price of 0.25 Swiss francs ($0.27) a share to be paid in UBS shares. Credit Suisse shares ended Friday at 1.86 Swiss francs. The fast-paced nature of negotiations means that the terms of any final agreement may differ from those reported.

Credit Suisse is reportedly rejecting the offer, however, arguing that it is too low and would hurt shareholders and employees, people with knowledge of the matter told Bloomberg.

Credit Suisse declined to comment on the reports when contacted by CNBC.

The UBS offer comes as Credit Suisse shares posted their worst weekly decline since the start of the coronavirus pandemic, despite an announcement that it would access a loan of up to 50 billion Swiss francs ($54 billion) from the central bank Swiss.

It had already been struggling with a string of losses and scandals, and sentiment was rocked again last week with the collapse of Silicon Valley Bank and the closing of Signature Bank in the US, sending shares tumbling.

Credit Suisse’s scale and potential impact on the global economy is far greater than US banks. The Swiss bank’s balance sheet is about twice the size of Lehman Brothers when it collapsed, at around 530 billion Swiss francs at the end of 2022. It is also much more globally connected, with numerous international subsidiaries – making it a tidy management of the Credit Suisse situation even more important.

Credit Suisse lost about 38% of its deposits in the fourth quarter of 2022 and revealed in its delayed annual report early last week that outflows have yet to return. It reported a full net loss of 7.3 billion Swiss francs for 2022 and expects a further “significant” loss in 2023.

The bank had previously announced a massive strategic review in an attempt to address these chronic issues, with current CEO and Credit Suisse veteran Ulrich Koerner taking over in July.

This is a developing story. Please check back for updates.