Thousands of jobs are at risk in the City as regulators race to rescue one of the world’s biggest banks before markets open on Monday morning.
Officials and bankers are scrambling to secure a mercy takeover of Credit Suisse, a Swiss lender with a balance sheet of more than £470bn, after a disastrous week in which shares slumped by nearly a fifth and speculation mounted over its future.
The Swiss authorities are attempting to drive through a takeover of the bank by rival UBS after coming to the conclusion that it is the only option likely to ensure long-term stability. A deal could be sealed as soon as Saturday night, with the boards of both banks locked in meetings over the weekend.
It is feared that failure to reach a deal before Monday morning will cause a further plunge in shares that would have severe repercussions in markets around the world.
A previous attempt to restore market confidence by injecting $54bn (£44bn) into Credit Suisse with an emergency loan from the Swiss central bank failed to calm nerves on Wednesday, with shares falling lower in the following days.
The talks are being monitored closely by the Bank of England, which is not the lead regulator for either bank but is watching for potential repercussions in the UK.
Credit Suisse and UBS employ around 10,000 people in London between them, with headquarters in Canary Wharf and Broadgate in the City respectively. Banking insiders expect one of the biggest redundancy programmes since the 2008 crisis if the takeover goes ahead.
A takeover would create one of the biggest banks in the world, with a balance sheet of £1.3 trillion, more than twice the size of the Swiss economy – raising questions over whether it would be too big to rescue if the turmoil does not abate.
Parts of the bank would likely be auctioned off by UBS in future weeks, with rival Deutsche Bank expressing an interest in some of its business.
The US investment business Blackrock also considered a bid for Credit Suisse before ruling out making an offer, according to the Financial Times.