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How Crypto-Friendly Will UBS Be Following the Potential Credit Suisse Acquisition?

3 mins
Updated by Ryan Boltman
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In Brief

  • UBS and Credit Suisse have agreed in principle to a merger.
  • Tron CEO Justin Sun has tweeted that he would be willing to buy Credit Suisse and transform it into a web3 crypto-bank.
  • In light of recent bank failures and the FTX and Celsius bankruptcies there may be no appetite for a crypto-friendly bank.
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The crypto-friendly bank UBS Group AG is purportedly making an offer to purchase the global investment bank Credit Suisse with an increased offer of $3.2 billion dollars.

After a drop in its shares and bonds raised concerns about a global banking crisis, the Swiss central bank gave 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 rejected that there was a deal in the works to save Credit Suisse. UBS is proposing a price of SFr0.25 per share to be paid in UBS stock. This is a significant discount to the price at which UBS stock closed on Friday, March 17 (SFr1.86). 

Swiss authorities are looking into changing the laws of their country. In order to circumvent the vote of UBS shareholders on the proposed transaction as they rush to finalize the transaction. 

The agreement between the two major financial institutions is expected to be formalized soon. 

A Fluid Situation

UBS contends that there was an adverse change that rendered the deal null and void. If the credit default swaps increased by at least one hundred basis points. The situation is fluid, with no assurance that the same conditions or a deal will be reached in the future. 

It was decided not to go ahead with the announcement. Because many people felt that it was an unfair arrangement both to Credit Suisse and the shareholders. Others were critical of the plans to circumvent procedures for corporate governance by avoiding a vote by UBS shareholders.

A Lack of Transparency

There hasn’t been much communication between the two financiers up until this point. As a result, the conditions have been subject to influence from the Swiss National Bank and regulator FINMA. The United States Federal Reserve has a green light for the transaction to go ahead.

UBS plans to drastically decrease the size of the bank’s investment bank. To the point where the combined entity will account for 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 phrase merely describes a complete takeover of the group. There was no statement with regard to UBS and crypto offerings.

In the meantime, despite the fact that the deal is for one billion dollars, this sum does not take into consideration 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 purchase Credit Suisse and integrate it into the nascent web3 world.

His plan calls for the transformation of Credit Suisse into a crypto-friendly bank. Thereby paving the way for a financial system that is both decentralized and secure.

“I would like to propose my own offer of $1.5 billion to acquire Credit Suisse. And integrate it into the Web3.0 world,” Sun tweeted on Sunday, pointing out Switzerland’s crypto-friendly regulations. “We can capitalize on the country’s progressive policies to position ourselves as a financial innovation leader.”

UBS has agreed to purchase Credit Suisse for more than $2 billion, making it one of the latest financial institutions to be bailed out after 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 end of trading on Friday. 

While it is not clear on Twitter whether Sun was sincere about his offer. Or whether Swiss regulators would even consider it, he has a history of floating offers for deals that do not 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 Supervisory Authority FINMA have not issued official statements on Sun’s proposal. Perhaps indicating that they do not take 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 would prefer to see private acquisitions of troubled banks. Perhaps the timing isn’t right for another “crypto bro” to be front and center with regard to purchasing a major bank. Especially with the FTX disaster still top of mind.

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