Credit Suisse rescue plan may include nationalization, bondholder losses

A rescue plan for Swiss banking big Credit score Suisse might impose losses on its bondholders and even end in a full or partial nationalization of Credit score Suisse Group AG, a number of reviews revealed on March 19. 

Swiss authorities are contemplating making use of losses to Credit score Suisse bondholders as a part of the financial institution’s ongoing restoration efforts, Reuters learned from two sources. European regulators are involved that the transfer would possibly undermine investor confidence in Europe’s monetary sector.

One other report from Bloomberg claims that the Swiss authorities is analyzing a full or partial nationalization of the financial institution, the one accessible various if the UBS takeover is just not accomplished. Funding financial institution UBS is Switzerland’s largest financial institution.

Can anybody else bear in mind seeing European financial institution CDS and bonds quoted on a Sunday earlier than? Very surreal!

— Robert Smith (@BondHack) March 19, 2023

On March 18, the Swiss Nationwide Financial institution (SNB) and Switzerland’s monetary regulator said Credit Suisse’s acquisition by UBS is the “solely possibility” to stop a “collapse in confidence” in Credit score Suisse. 

The nationalization could be an emergency possibility as a result of complexities surrounding the deal and the restricted time accessible. Swiss authorities are working over the weekend on “emergency measures” to speed up the deal earlier than Asian markets open, together with permitting the deal to proceed with no shareholder vote.

UBS is reportedly asking the federal government to shoulder round $6 billion on authorized prices and potential future losses within the occasion of a takeover. UBS is providing $1 billion for Credit score Suisse, a substantial low cost underneath the financial institution’s market worth on March 17 of practically $8 billion, according to Tradeview.

Swiss authorities are additionally involved about job losses as a result of deal. Based on reviews, Credit score Suisse was beforehand contemplating shedding 9,000 workers to save lots of its enterprise.

Funding firm BlackRock denied on March 18 plans or curiosity in buying Credit score Suisse. “BlackRock is just not taking part in any plans to amass all or any a part of Credit score Suisse, and has no real interest in doing so,” the agency stated on Twitter.