UBS bought Credit Suisse for $3.25 billion to avert the financial crisis. The deal between the two major banks was finalized over the course of Sunday, after a weekend of negotiations that resulted in what UBS Group AG Chairman Colm Kelleher defined in a press release as an "emergency rescue":
This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue. We have structured a transaction which will preserve the value left in the business while limiting our downside exposure. Acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking will augment UBS’s strategy of growing its capital-light businesses. The transaction will bring benefits to clients and create long-term sustainable value for our investors.
The sale will enable Credit Suisse shareholders to acquire one UBS share for every 22.48 Credit Suisse shares held. To speed up the closing of negotiations between the two big Swiss banks, the country's authorities changed laws in an attempt to stop a shareholder vote on the deal before Monday. Laws by which, as assured by Business Insider, the Swiss National Bank could provide UBS with a $100 billion liquidity injection.
Credit Suisse rejected the first agreement
The first agreement, for which UBS paid $1 billion, did not convince Credit Suisse. According to Bloomberg, the bank considered the sale price too low and that selling for that amount would put the assets of the company's shareholders and employees at risk, according to people close to the matter. These individuals also claimed that the purchase, conducted primarily by the Swiss National Bank and regulator Finma, had the approval of the U.S. Federal Reserve.
These same institutions urged both banks to accelerate talks on Saturday. The urgency, sources close to the negotiations said, was motivated by fears that the financial crisis would worsen after a week in which Credit Suisse clients fled and many shareholders withdrew deals they were closing with the Swiss bank.
Another possible solution to the financial crisis was the partial or total nationalization of Credit Suisse. Switzerland considered this option following complications in negotiations for UBS Group AG to acquire the smaller Swiss bank for $1 billion. Difficulties include issues such as possible government support to cover possible legal and other losses. Thus, UBS asked the government to bear certain legal costs and possible future losses in any acquisition. A cost that the Swiss bank estimated, in a report to which Bloomberg obtained access, at around six billion dollars. And which they finally achieved when the sale closed.