Exclusive-UBS seeks about $6 billion in government guarantees for Credit Suisse deal -source

© Reuters. FILE PHOTO: The headquarters of Swiss banks UBS and Credit Suisse are seen at Paradeplatz square in Zurich, Switzerland March 16, 2023. REUTERS/Denis Balibouse

By Oliver Hirt and Stefania Spezzati

(Reuters) – UBS Group AG (SIX:) is seeking government guarantees of about $6 billion for a potential takeover of Credit Suisse Group AG, a person with knowledge of the discussions told Reuters on Saturday.

The talks are still ongoing and the figure could change as several scenarios are still under review, the person said.

The guarantees would cover the cost of winding down parts of Credit Suisse and potential litigation charges, the source said. A second person confirmed this without specifying the $6 billion figure.

Talks to resolve the crisis of confidence in Credit Suisse are encountering significant obstacles, and 10,000 jobs may have to be cut if the two banks combine, the first source said.

Swiss regulators are racing to present a solution for Credit Suisse before markets reopen on Monday, but the complexities of combining two behemoths raises the prospect that talks will last well into Sunday, said the person, who asked to remain anonymous because of the sensitivity of the situation. Credit Suisse, UBS and the Swiss government declined to comment.

Credit Suisse was valued at the equivalent of about $8 billion at the close on Friday.    

    Deutsche Bank AG (NYSE:) is also interested in acquiring parts of Credit Suisse, the first source said. However, any deal with the German lender could take longer, the source said. 

    A spokesperson for Deutsche Bank (ETR:) declined to comment.

Bloomberg earlier reported the German lender’s interest in parts of Credit Suisse.

    “Any potential deal will be littered with complexity, litigation protections being one, with the situation to remain fluid but with clarity necessary before Monday,” Thomas Hallett, a KBW analysts said in a note to clients on Saturday.