A rescue plan for Swiss banking giant Credit Suisse could cost its bondholders and even lead to the full or partial nationalization of Credit Suisse Group, according to multiple reports on March 19.
Swiss authorities are considering assigning losses to Credit Suisse bondholders as part of the bank's ongoing recovery efforts, Reuters has learned from two sources. European regulators fear the move could undermine investor confidence in Europe's financial sector.
A separate Bloomberg report said the Swiss government was analyzing full or partial nationalization of the bank, the only viable option if the UBS takeover did not go through. Investment bank UBS is the largest bank in Switzerland. On March 18, the SNB and the Swiss financial regulator said that the acquisition of Credit Suisse by UBS was the "only option" to prevent a "collapse of confidence" in Credit Suisse. Nationalization would be an urgent option due to the complexity of the deal and the limited time available. Swiss authorities over the weekend were studying "emergency measures" to speed up the deal process before Asian markets open, including allowing deals to proceed without a shareholder vote.
UBS is reportedly asking the government to cover around $6 billion in legal costs and potential future losses in the takeover. UBS offered $1 billion for Credit Suisse, according to Companies Market Cap, a sizable discount to the bank's market capitalization of nearly $8 billion on March 17.
Swiss authorities are also concerned that the deal could lead to job losses. Credit Suisse had previously considered cutting 9,000 jobs to save the business, according to reports. Investment firm BlackRock on March 18 denied plans or interest in buying Credit Suisse. "BlackRock is not involved in any plans to acquire all or any part of Credit Suisse, and has no interest in doing so," the firm said on Twitter.
