UBS AG is seeking $6 billion from the Swiss government. The move comes as executives seek to address a crisis of confidence at Credit Suisse, which has been embroiled in recent turmoil following the collapse of US lenders Silicon Valley Bank and Signature Bank. Regulators want a resolution before markets reopen on Monday, while talks are facing significant hurdles and the two banks could face up to 10,000 job cuts if they merge.

UBS is Under Pressure To Take Over Credit Suisse

UBS was under pressure from Swiss authorities to take over its local rival to bring the crisis under control, according to two people with knowledge of the matter. The plan could result in the closure of Credit Suisse’s Swiss business. Switzerland is preparing to use emergency measures to fast-track the deal, according to the Financial Times.

US officials are involved, working with their Swiss counterparts to help broker a deal, Bloomberg News reported, citing people familiar with the matter. Berkshire Hathaway’s Warren Buffett has discussed the banking crisis with senior Biden administration officials, a source told Reuters. The White House and the US Treasury declined to comment.

Britain’s Finance Minister Jeremy Hunt and Bank of England Governor Andrew Bailey are also in regular contact this weekend on the fate of Credit Suisse, a source familiar with the matter said. Spokesmen for the British Treasury and the Bank of England’s Prudential Regulation Authority, which oversee lenders, declined to comment.

Credit Suisse Shares Lose a Quarter of Their Value

Shares of Credit Suisse lost a quarter of their value last week. The bank was forced to tap $54 billion in central bank funding as it tries to recover from a series of scandals that have dented investor and consumer confidence. 

Other Competitors Are Also Interested in Credit Suisse

There were several reports of interest for Credit Suisse from other competitors. Bloomberg reported that Deutsche Bank was looking to buy some of its assets, while US financial giant BlackRock denied reports that it was participating in a rival bid for the bank.

Silicon Valley Bank Failure Focuses on Interest Rate Risk

The failure of California-based Silicon Valley Bank underscored how the relentless drive to raise interest rates by the US Federal Reserve and other central banks is putting pressure on the banking sector. 

Banking Stocks Take a Hit Globally

Banking stocks have been hit globally since the collapse of SVB, with the S&P Banks Index falling 22%, the biggest two-week loss since the pandemic rocked markets in March 2020. Big US banks gave small lender First Republic a $30 billion lifeline. US banks have requested a record $153 billion in emergency liquidity from the Federal Reserve in recent days.

More Oversight For The Banking Sector

In Washington, the focus is on more oversight to ensure banks and their executives are held accountable. Biden called on Congress to give regulators more power over the sector, including imposing higher fines, returning funds, and barring executives from failed banks.