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Potential buyer seeks government guarantees for Credit Suisse takeover – Reuters – RT Business News

UBS would like the government to partially cover the acquisition of the defaulting lender

Multinational investment bank UBS wants the Swiss government to cover around $6 billion of the costs if it agrees to buy Credit Suisse, a rival lender whose shares fell this week due to client exits and a loss of investors, Reuters reported on Saturday, citing sources.

Earlier media reports said the banks were discussing a merger, an idea floated by the Swiss National Bank and Financial Markets Supervisory Authority (FINMA), to save Credit Suisse from insolvency.

Public funds are expected to help defray the cost of winding up parts of Credit Suisse following the merger, as well as potential litigation costs, sources told Reuters. However, negotiations over the deal are reportedly tense as the merger could result in the loss of some 10,000 jobs.

According to a Wall Street Journal report, the deal could be announced on Sunday. The outlet also notes that, in order to speed up the merger process, regulators had proposed waiving the requirement for a shareholder vote.

Analysts say Swiss regulators must present a solution to the crisis to Credit Suisse before markets open on Monday, to avoid another drop in the lender’s share price.

Both banks, as well as the Swiss government, have so far declined to comment on the reports.

Swiss banking giant in talks to buy Credit Suisse – media

Shares of Credit Suisse have lost about a quarter of their value over the past week, despite securing a $54 billion loan from the Swiss central bank. The bank is the second largest in Switzerland, behind USB, and is considered systemically important in Switzerland and globally. Banking experts warn that the failure of the bank would affect the entire global financial system.

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