UBS has agreed to buy up Credit Suisse and has in fact increased its offer to over $2 billion. This came following indications that Swiss authorities Swiss authorities are poised to change the country’s laws and bypass a shareholder vote required for the transaction.
This decision and the offer by UBS follows a rush to close the deal before Monday, March 20, 2023.
According to international media, banks and authorities are aiming to announce the deal on Sunday night. The efforts to avoid following standard corporate governance guidelines by blocking a UBS shareholder vote, however, were criticized by some.
UBS has agreed to buy Credit Suisse after upping its bid to more than $2 billion, according to a Financial Times tweet from 5 p.m. on Sunday, which generated several responses from Twitter users.
Twitter user, Harry Lyn Beck @tismadnessnow, while replying the tweet, queried the move and asking: “How much is the FED and Treasury contributing to bail out the Swiss banking system?”
“Curious George@Curious80891460″ in his reply wondered why it was a “72% discount to Friday’s close.”
Two people close to the deal reportedly confirmed that the Swiss National Bank has agreed to offer a $100bn liquidity line to UBS as part of the deal.
UBS has as well agreed to a softening of a material adverse change clause that would void the deal if its credit default spreads jump. The material adverse change clause applies for the period between the signing and closing of the deal.
There has been limited contact between the two lenders and the terms have been heavily influenced by the Swiss National Bank and regulator Finma, Financial Times reports, quoting its sources.
The US Federal Reserve has given its assent to the deal, they added. Vincent Kaufmann, chief executive of Ethos Foundation, which represents Swiss pension funds that own between 3 per cent and 5 per cent of Credit Suisse and UBS, told the Financial Times that the move to bypass a shareholder vote on the deal was poor corporate governance.
“I can’t believe our members and UBS shareholders will be happy about this,” he said. “I have never seen such measures taken; it shows how bad the situation is.”
Meanwhile, Saudi Arabia, a major investor in Credit Suisse had said it would not bail out the bank as it struggles to avert a collapse.