UBS to buy Credit Suisse for over $2 billion

Switzerland’s largest bank, with the participation of the country’s authorities, agreed to buy its main competitor, Credit Suisse, for just over $2 billion. That’s more than double the price negotiated this morning, but nearly four times less than Credit Suisse’s capitalization at Friday’s close of 7.4 billion francs ($8 billion).

This is reported by the Financial Times and Bloomberg, citing people familiar with the negotiations. UBS has agreed to increase the price of the transaction, which will be paid for in its shares, from 0.25 francs per Credit Suisse share to over 0.5 francs. Credit Suisse’s board of directors rejected the initial offer.

The Swiss National Bank has agreed to give UBS $100 billion to provide the bank with sufficient liquidity while it integrates the operations of its struggling competitor. Meanwhile, on Thursday morning alone, Credit Suisse announced it planned to borrow up to 50 billion francs ($54 billion) from the central bank.

According to FT sources, representatives of the banks had little contact with each other during the negotiations, the terms of the agreement were mainly formulated by representatives of the Central Bank and the financial regulator FINMA. The US Federal Reserve approved the takeover (both banks operate on the US market).