The boards of Switzerland’s two biggest lenders are set to meet separately over the weekend to discuss a deal, the FT said, citing multiple people briefed on the talks.
A source with knowledge of the matter said that Swiss regulators are encouraging UBS and Credit Suisse to merge, but that both banks do not want to do so. The regulators do not have the power to force the merger, the person said.
Credit Suisse shares jumped 9% in after-market trading following the FT report. Credit Suisse and UBS declined to comment on the report.
Credit Suisse, a 167-year-old bank, is the biggest name ensnared by market turmoil unleashed by the collapse of U.S. lenders Silicon Valley Bank and Signature Bank over the past week, forcing it to tap $54 billion in central bank funding.
Credit Suisse executives were due to hold meetings over the weekend to chart a path forward for the ailing Swiss bank, people familiar with the matter have previously said.
In the latest sign of its mounting troubles, at least four major banks including Societe Generale SA and Deutsche Bank AG have put restrictions on their trades involving the Swiss lender or its securities, according to five sources with direct knowledge of the matter.”Credit Suisse is a very special case,” said Frederique Carrier, head of investment strategy at RBC Wealth Management. “The Swiss central bank stepping in was a necessary step to calm the flames, but it might not be sufficient to restore confidence in Credit Suisse, so there’s talk about more measures.”
The frantic efforts to shore up Credit Suisse come as policymakers including the European Central Bank and U.S. President Joe Biden have sought to reassure investors and depositors that the global banking system is safe. But fears of broader troubles in the sector persist.
Already this week, big U.S. banks had to swoop in with a $30 billion lifeline for smaller lender First Republic, while U.S. banks altogether sought a record $153 billion in emergency liquidity from the Federal Reserve in recent days.
That surpassed a previous high set during the most acute phase of the financial crisis some 15 years ago.
This reflected “funding and liquidity strains on banks, driven by weakening depositor confidence,” said ratings agency Moody’s, which this week downgraded its outlook on the U.S. banking system to negative.
In Washington, focus turned to greater oversight to ensure that banks – and their executives – are held accountable.
Biden – who earlier this week promised Americans that their deposits are safe – on Friday called on Congress to give regulators greater power over the banking sector, including leveraging higher fines, clawing back funds and barring officials from failed banks, a White House statement said.
A group of Democratic U.S. lawmakers also asked regulators and the Justice Department for a probe into the role of Goldman Sachs in the collapse of SVB, the office of U.S. Representative Adam Schiff said on Friday.