The inevitable collapse of the banks and the only way to rescue..Is Credit Suisse disappearing?

The global markets, led by the US market, are afraid to start opening tomorrow, as the sound of the US-Swiss banking crisis continues, and it seems that the federal and central tricks to provide sufficient support to banks in order to restore stability were not enough for reassurance.

Credit Suisse received support from the Russian Central Bank to save its liquidity, but analysts are still not confident in the bank that is in decline and believe that selling should remain the first option so that the bank does not fall, causing great harm to everyone. Indeed, Credit Suisse management began holding talks this weekend to assess “strategic scenarios” for the bank, according to Reuters sources.

The only way to save?

The Swiss bank UBS appears as the first option to buy Credit Suisse, whether in a full or partial deal, the Financial Times reported on Friday, and details indicate strong support from the Swiss Central Bank and the FINMA organization to finish the deal with the aim of strengthening the Swiss banking system. This news succeeded in reviving the bank’s shares in after-hours trading last Friday.

Reuters reported that UBS requested within the deal to obtain government guarantees of about $6 billion in order to acquire Credit Suisse, and discussions are still ongoing at this time. The $6 billion included covering the cost of liquidating parts of Credit Suisse and potential litigation fees. If the deal is completed and the two banks are merged, it is expected that about ten thousand employees will be laid off.

The Swiss administration, as well as the US, is seeking to resolve the crises before the opening of tomorrow and the intensification of the current crisis.

Credit Suisse is undergoing comprehensive strategic reforms aimed at restoring stability and profitability after a series of losses and scandals, but markets and stakeholders remain unconvinced.

Stocks fell again on Friday, posting their worst weekly decline since the outbreak of the coronavirus pandemic, and failed to sustain Thursday’s gains that followed the announcement that Credit Suisse will obtain a loan of up to 50 billion Swiss francs ($54 billion) from the central bank.

UPS vs. Credit

The Swiss bank UBS has a capital of $60 billion, while Credit Suisse has a capital of $7 billion. Pete Whitman, chairman and partner in the Swiss consulting firm Porta Advisors, said in statements to CNBC that he expects to announce the merger before The market opens on Monday.

He continued, “If negotiations do not work out this weekend, CS is expected to suffer a freefall from falling equity prices, rising credit default swap prices, shrinking bank counterparty lines, client asset outflows and international regulators in New York, London and Frankfurt.”

“The essential elements of direct corporate financial transactions should be the unwinding and/or sale of significant parts of the investment bank and securing the continuation of the Swiss bank’s business,” Whitman added.

Liquidation and subscription

And Kian Hassan of Goldman Sachs (NYSE:GS) posted in a note Thursday that the sale of Credit to UBS would likely lead to: an IPO or sub-division of Credit Suisse to avoid “too much concentration and market share control risk in the domestic market.” swiss”; and that the investment bank would be closed and its wealth and asset management divisions retained.