UBS Group AG agreed to buy Credit Suisse Group AG in a historic, government-brokered deal aimed at containing a crisis of confidence that threatened to spread across global financial markets.
The Swiss bank is paying more than $2 billion for its rival, according to people with knowledge of the matter. It will be an all share deal and priced at a fraction of Credit Suisse’s close on Friday, when the bank was valued at about 7.4 billion francs ($8 billion.) The people asked not to be identified because the deal isn’t public yet.
The Swiss National Bank has agreed to offer a $100 billion liquidity line to UBS as part of the deal, according to the Financial Times, which reported the agreement first. Swiss authorities are poised to change the country’s laws to bypass a shareholder vote, the paper reported, citing people close to the matter.
Representatives for the two banks declined to comment.
The plan, negotiated in hastily arranged crisis talks over the weekend, seeks to address a massive rout in Credit Suisse’s stock and bonds over the past week following the collapse of smaller U.S. lenders.
A liquidity backstop by the Swiss central bank mid-week failed to end a market drama that threatened to send clients or counterparties fleeing, with potential ramifications for the broader industry.
U.S. authorities have been working with their Swiss counterparts because both lenders have operations in the U.S. and are considered systemically important in Switzerland, Bloomberg reported earlier. Authorities sought an agreement before markets opened again in Asia.
UBS had earlier tabled an offer of about $1 billion, or 0.25 francs a share for Credit Suisse, which the firm had pushed back on, people with knowledge of the matter said earlier on Sunday.
UBS agreed to a softening of a material adverse change clause that would void the deal if its credit default spreads jump, the FT also reported people familiar with the matter as saying. The material adverse change clause applies for the period between the signing and closing of the deal, the people said.