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UBS to buy Credit Suisse for $2bn (Maybe) [Updated]

This is an opinion piece by our Analyst Team.

Update on 20th March: CNN reports the figure is actually $3.25 billion.

The ‘wires’ (Bloomberg specifically) are live this Sunday evening with news from lots of ‘well placed sources’ suggesting for sure that maybe UBS will acquire Credit Suisse for 2 billion dollars ‘tomorrow’ or as soon as possible to try and bring somewhat of a resolution to the current issue.

Current, because if this goes ahead, there are likely to be a lot more follow-on problems. There will be a lot of people upset at this – and the strong hint that the Swiss government/central bank is going to set aside a ‘budget’ to cover all of the predicted legal problems in future – will probably encourage a wide variety of legal cases.

That said, $2 billion isn’t that bad of a deal (from one limited perspective) given that Credit Suisse closed on Friday with a public valuation of about $8 billion. That in itself was shocking. But once everyone’s had the weekend to digest this and transfer their remaining funds out of the beleaguered bank, what amount would/will the share price open tomorrow morning? Less than the UBS offer?

Who wants to check?

Fascinating.

I for one would like to see how things would have panned out if Credit Suisse was instantly nationalised. I am not sure the country or the European banking system is better off without the strong player that Credit Suisse was and could have become again. You need a ying to the UBS yang. There is a ridiculous amount of value in the Credit Suisse brand, infrastructure, knowledge and capability of the bank’s 50,000 staff.

You can follow along with the rest of the market at Bloomberg’s live blog on the issue right here. You need to bring your own popcorn.

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