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Bank of England won’t object to troubled rival Credit Suisse’s $1 billion takeover of UBS

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The Bank of England will not object to UBS taking over fellow Swiss lender Credit Suisse amid a frantic race to prevent a repeat of the 2008 global banking crash, according to reports.

UBS is in talks to acquire all or part of its compatriot later this week.

The Swiss Central Bank’s $54 billion loan to Credit Suisse has failed to stem the slide in its share price which is down below 10 percent.

Coupled with last week’s collapse of Silicon Valley bank, whose UK branch was to be taken over by HSBC for the nominal sum of £1, Credit Suisse has worried about the crisis contagion into the international banking system.

The Financial Times said UBS could pay up to $1 billion in a deal that would require the Swiss government to change a law to bypass a shareholder vote.

Along with UBS, Credit Suisse and the government are said to be keen to announce the acquisition by Sunday afternoon. Britain’s central bank has reportedly indicated its blessing for such a deal.

The Bank of England declined to comment on its position, which was first reported by Sky News.

Credit Suisse, which employs 5,000 people in the UK, has been classified by the Global Financial Stability Board as one of just 30 “systemically important” lenders in the global banking system. Any deal could also result in significant job losses.

Two major US banks also collapsed in a turbulent week for the industry.

Mohammed Al-Arian, chief economic adviser at German financial services firm Allianz, told the BBC: “This is not a voluntary action, it is a shotgun wedding and it is being done to restore financial stability.

“Without this Credit Suisse could end up in a death spiral, in which it would find it very difficult to carry out its banking activities.

“It could raise questions about other banks at a time when there are banking concerns in the United States as well.”

Mr El-Arian said the current turmoil could prompt banks to become “risk averse”, leading to a drop in credit availability.


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