UBS signs deal to buy Credit Suisse for more than $3 billion

The transaction had been reported earlier this afternoon by the British newspaper Financial Times.
Separately, The Wall Street Journal reported that the Swiss National Bank offered UBS about $100 billion in liquidity to help it take over Credit Suisse’s operations, according to people familiar with the matter.

The deal was reportedly cobbled together by Swiss regulators to prevent crumbling confidence in banks from spreading, according to sources. Swiss authorities were seeking an announcement of the deal before Asian markets opened.

Swiss authorities are in the midst of a process to change the country’s laws, which regulate transactions of this type, to prevent the negotiation from having to go through a shareholder vote, according to the FT. The idea is to allow the purchase to be signed this Sunday, to avoid further turmoil with Credit Suisse shares on the Stock Exchange on Monday.

The situation is an emergency, but there is no guarantee that the terms will remain the same or that an agreement will be reached, according to the sources heard by the FT.

Contact between the two banks was limited, and the terms of the deal were heavily influenced by the Swiss Central Bank (SNB) and regulator Finma, the sources said. The Federal Reserve (Fed, the US Central Bank) has given its consent for the progress of the agreement, they added.

Both sides have been in discussions with regulators since Wednesday, when Credit Suisse asked the Swiss central bank for an emergency credit line of CHF50 billion ($54 billion).

According to the FT, UBS will drastically shrink Credit Suisse’s investment bank, so the combined entity will make up no more than a third of the merged group, two of the people said.

Contacted by the FT, SNB, UBS, Credit Suisse and Finma declined to comment.