UBS examines Credit Suisse takeover amid US banking fallout: What you need to know

(C) Reuters. Customers wait in line outside a branch of the Silicon Valley Bank in Wellesley, Massachusetts, U.S., March 13, 2023. REUTERS/Brian Snyder

(Reuters) – UBS AG was mulling a takeover of its embattled Swiss peer Credit Suisse on Saturday, sources said, which could allay fears that an unfolding crisis at the bank might destabilise the global financial system.

DEVELOPMENTS

* A takeover of Credit Suiss by UBS could see the Swiss government offer a guarantee against the risks involved, said two people with knowledge of the matter on Saturday.

* The boards of both banks were set to meet separately over the weekend, with one source saying that Swiss regulators are encouraging the pair to merge but neither bank wants to do so.

* At least four major banks, including Societe Generale (OTC:SCGLY) and Deutsche Bank (ETR:DBKGn), are restricting new trades involving Credit Suisse or its securities, five sources told Reuters.

* U.S. investment giant BlackRock (NYSE:BLK) denied a report in the Financial Times that it was participating in a rival bid for all or parts of Credit Suisse.

* ECB Governing Council member Pierre Wunsch said he did not expect a repeat of the 2008 financial crisis despite turbulence caused by the collapse of Silicon Valley Bank, saying European banks were subject to tougher rules than regional U.S. banks.

* Goldman Sachs (NYSE:GS) cut its recommendation on exposure to European bank debt to neutral from overweight, saying a lack of clarity on Credit Suisse’s future path would put pressure on the broader sector.

* SVB Financial Group filed for a court-supervised reorganisation under Chapter 11 bankruptcy protection to seek buyers for its assets, days after regulators took over its former unit Silicon Valley Bank (SVB).

* The U.S. Federal Deposit Insurance Corp (FDIC) is considering steps to facilitate takeovers of Signature Bank (NASDAQ:SBNY) and Silicon Valley Bank, a source told Reuters.

* Moody’s (NYSE:MCO) downgraded First Republic Bank (NYSE:FRC)’s debt. Before the announcement, the bank’s shares plunged nearly 33%, capping an 80% wipeout over 10 sessions, despite a rescue package with $30 billion in deposits injected by large U.S. banks.

* U.S. President Joe Biden urged Congress to give bank regulators greater power.

* A senior People’s Bank of China official said the collapse of SVB showed how rapid monetary policy shifts were having spillover effects, state-owned newspaper Shanghai Securities News reported.

MARKETS

* Investor sentiment remained fragile on Friday, leaving global equities under pressure while gold prices posted their largest one-week rally in three years. The dollar slipped and Treasury yields fell.

* As worries over banks swirl, investors are seeking protection against a market crash.