Author: ANDY RAIN | EFE
The Swiss authorities would be willing to reform the regulation to circumvent the shareholder veto
Negotiations for resurfacing Credit Suisse continuation of this Sunday at the headquarters of the entity. A few hours before the opening of the world stock exchanges, the authorities of the Swiss state bank and his rival UBSthey are finalizing the details of the plan to avoid bankruptcy of the hundred-year-old entity.
As far as he could find out Financial Times, UBS would offer $1,000 million to take over part of the entity. Of course, it requires the state to provide additional guarantees, apart from emergency liquidity. The bank reportedly asked to be protected from any legal cases or regulatory investigations inherited from Credit Suisse in the future that could lead to losses.
The operation would involve an additional risk: breaking the rules for consulting shareholders. The current framework requires a six-week period to review conditions. But the situation is so critical, and the potential for systemic harm so great, that hours are not available to resolve the crisis. That is why, according to the FT, the Government would already be working on a plan with emergency measures that facilitate the purchase. As? Change of law in avoid inquiries and potential vetoes from UBS shareholders.
And that is that the absorption of Credit Suisse, which suffered a outflow of deposits of 10,000 million euros per day throughout the week, could worsen the market valuation of UBS shares from Monday, causing losses in the portfolios of its shareholders. The same happens with those from Credit Suisse, who have to take said losses when the shares are swapped. But in his case, the alternative would be to suffer new collapses until the entity’s complete bankruptcy.
The talks also discuss some purchase conditions, such as canceling the contract in the event that the assumed credit risk exceeds certain thresholds.
Currently, the regulatory authorities of the United States and the Eurozone, in which both entities operate, are blessing the operation, which could ease the nervousness of the market in the face of a possible financial crisis larger.
Source: La Vozde Galicia
I am Jason Root, author with 24 Instant News. I specialize in the Economy section, and have been writing for this sector for the past three years. My work focuses on the latest economic developments around the world and how these developments impact businesses and people’s lives. I also write about current trends in economics, business strategies and investments.
