After an emergency funding lifeline failed to restore confidence in investors, UBS Group AG is reportedly in discussions to take over all or part of crisis-hit Credit Suisse. The boards of Switzerland's two biggest lenders set to meet separately over the weekend, the Financial Times reported.
The report said that Swiss National Bank and regulator FINMA are organising talks in an attempt to build confidence in the country's banking sector.
Swiss regulators informed their counterparts in the United States and United Kingdom that the merger of the two banks was their "Plan A" to salvage the confidence in Credit Suisse, the report added.
Several other options are also under discussion between the two banks as both sides try to evaluate regulatory constraints in different jurisdictions, the report said.
However, reports also said that UBS Group AG and Credit Suisse were opposed to a forced merger, with UBS preferring to focus on its wealth-centric strategy and reluctant to take on risks related to its smaller rival, reported Bloomberg.
After the collapse of Silicon Valley Bank (SVB) and New York-based Signature Bank, crisis emerged in Credit Suisse as well forcing it to tap $54 billion in central bank funding.
According to reports, at least four major banks including Societe Generale SA and Deutsche Bank AG have put restrictions on their trades involving the Swiss lender or its securities.
The crisis-laden Credit Suisse Group AG has a major presence in India’s derivatives market and hence its fate is more relevant to the country than that of the fall of Silicon Valley Bank.
Credit Suisse owns assets worth more than Rs 20,700 crore in India and is the 12th largest foreign bank in the country. The presence of foreign banks in India is considerably small with just 6 per cent share in total assets—with Credit Suisse accounting to a mere 1.5 per cent of that share—4 per cent in loans, and 5 per cent in deposits.