Swiss Banking giant UBS has agreed to buy embattled lender Credit Suisse, Switzerland's central bank has announced. This follows weekend talks trying to agree to a rescue before trading opened on Monday.The Swiss National Bank said at a press conference in Bern on Sunday evening that UBS would be taking over embattled lender Credit Suisse.

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Swiss President Alain Berset said that the Swiss Federal Council welcomed the takeover.

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Berset said the takeover was the "best solution" to restore and strengthen market confidence in Credit Suisse and the Swiss financial center.

Government and banking officials had been locked in urgent talks to rescue the embattled lender,which was given a $54 billion (€50 billion) lifeline by the country's central bank this week.

According to a prior report in business pulication The Financial Times, UBS had agreed to pay roughly $2 billion for Credit Suisse in the deal struck on Sunday. The paper cited unnamed sources familiar with the matter.

Offer barely one quarter of shares' face value

Earlier there were reports that UBS had offered to buy the bank for up to $1 billion, but Credit Suisse had reportedly pushed back against the offer.

Swiss media and Reuters news agency also reported that UBS was also seeking $6 billion in guarantees from the Swiss government as part of a possible purchase of its rival, citing a person with knowledge of the talks. The guarantees would cover the cost of winding down parts of Credit Suisse and potential litigation charges.

The Financial Times said UBS would pay 0.50 Swiss francs (around $0.54 or €0.50) per Credit Suisse share, well below the closing price of 1.86 francs on Friday. That would make the bank's value by market capitalization around $7 billion, while as recently as a year ago Credit Suisse was valued at roughly $25 billion by shareholders.

The publication reported that Swiss authorities were planning to change laws so a shareholder vote for the transaction could be bypassed, with investors highly unlikely to be satisfied with the compensation.

The aim for such a move would be to guarantee the transaction would be completed before markets open on Monday, at which point the stock could in theory renew its freefall.

kb/msh (Reuters, AFP)

(The above story first appeared on LatestLY on Mar 20, 2023 12:20 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).