Will UBS be crypto-friendly after potential Credit Suisse purchase?
Crypto-friendly bank UBS Group AG is reportedly making an offer to buy global investment bank Credit Suisse with an increased offer of $3.2 billion.
After a fall in stocks and bonds fueled concerns of a global banking crisis, the Swiss central bank granted Credit Suisse a $54 billion reprieve on Thursday. Analysts said that may not be enough.
UBS: A White Knight for Crypto?
The approach from UBS comes after BlackRock denied a deal was in the works to rescue Credit Suisse. UBS proposes a price of SFr 0.25 per share to be paid in UBS shares. This is a significant discount to the price at which UBS stock closed on Friday 17 March (SFr1.86).
Swiss authorities are looking at changing the laws in their country. To bypass the UBS shareholders’ vote for the proposed transaction as they rush to complete the transaction.
The agreement between the two major financial institutions is expected to be formalized soon.
A fluid situation
USB claims that it was a negative change that made the agreement void. If the credit default swaps increased by at least one hundred basis points. The situation is fluid, with no guarantee that the same conditions or an agreement will be reached in the future.
It was decided not to go ahead with the announcement. Because many felt that it was an unfair arrangement both towards Credit Suisse and the shareholders. Others were critical of the plans to circumvent corporate governance procedures by avoiding a vote by UBS shareholders.
Lack of transparency
There hasn’t been much communication between the two financiers until now. As a result, conditions have been subject to influence from the Swiss National Bank and regulator FINMA. The US central bank has given the go-ahead for the transaction to take place.
UBS plans to drastically decrease the size of the bank’s investment bank. To the point where the merged entity will constitute more than one-third of the merged group. On the other hand, there is still a need for clarification on the business divisions of Credit Suisse, and this sentence only describes a complete takeover of the group. There was no statement regarding UBS and crypto offerings.
Meanwhile, despite the deal being for one billion dollars, this sum does not take into account the additional provisions that the Swiss National Bank has included to ensure that the transaction will be completed successfully to save Credit Suisse.
Credit Suisse: A crypto-friendly bank?
Justin Sun, the co-founder of Tron, has made an offer to buy Credit Suisse and integrate it into the emerging web3 world.
His plan calls for the transformation of Credit Suisse into a crypto-friendly bank. In this way, arrangements are made for a financial system that is both decentralized and secure.
“I would like to propose my own offer of $1.5 billion to buy Credit Suisse. And integrate it into the Web3.0 world,” Sun tweeted on Sunday, pointing to Switzerland’s crypto-friendly rules. “We can take advantage of the country’s progressive policies to position ourselves as a financial innovation leader.”
UBS has agreed to buy Credit Suisse for more than $2 billion, making it one of the last financial institutions to be bailed out following the failures of Silicon Valley Bank and Signature Bank in the US earlier this month. According to TradingView data, the bank’s market capitalization was more than $7 billion at the close of trading on Friday.
While it is not clear on Twitter whether Sun was sincere about his offer. Or if Swiss regulators would even consider it, he has a history of floating offers for deals that never materialize. Sun indicated in January that he was ready to pay up to $1 billion for Digital Currency Group assets.
Sun also stated last year that he was willing to invest up to $5 billion in struggling crypto companies.
Credit Suisse and the Swiss financial market regulator FINMA have not issued official statements on Sun’s proposal. Perhaps indicating that they are not taking his offer seriously.
“We can create a new standard for financial innovation that benefits everyone. By acquiring Credit Suisse and transforming it into a crypto-friendly financial institution,” Sun wrote.
While many prefer to see private buyouts of troubled banks. Perhaps the timing is not right for another “crypto brother” to be at the center of buying a major bank. Especially with the FTX disaster still looming large.
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