UBS AG is seeking government guarantees of about $6 billion (€5.6bn) for a potential takeover of Credit Suisse Group AG, a person with knowledge of the discussions said.
The discussions 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.
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, one 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 las twell into tomorrow, 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 shares lost a quarter of their value in the last week. It was forced to tap $54 billion (€50.6bn) in central bank funding as it tries to recover from a string of scandals that have undermined the confidence of investors and clients.
This made it the first major global bank to take up an emergency lifeline since the 2008 financial crisis.
Credit Suisse shares lost a quarter of their value in the last week. It was forced to tap $54 billion (€50.6bn) in central bank funding as it tries to recover from a string of scandals that have undermined the confidence of investors and clients.
This made it the first major global bank to take up an emergency lifeline since the 2008 financial crisis.
The company ranks among the world's largest wealth managers and is considered one of 30 global systemically important banks whose failure would ripple throughout the entire financial system.
The banking sector's fundamentals are stronger and the global systemic linkages are weaker than during the 2008 global financial crisis, Goldman analyst Lotfi Karoui wrote in a note to clients late yesterday.
That limits the risk of a "potential vicious circle of counterparty credit losses", Mr Karoui said.
"However, a more forceful policy response is likely needed to bring some stability," he added.
The bank said the lack of clarity on Credit Suisse's future will pressure the broader European banking sector.
A senior official at China's central bank said that high interest rates in the major developed economies could continue to cause problems for the financial system.
There were multiple reports of interest for Credit Suisse from other rivals.
Bloomberg reported that Deutsche Bank was looking at the possibility of buying some of its assets, while US financial giant BlackRock denied a report that it was participating in a rival bid for the bank.
The failure of California-based Silicon Valley Bank brought into focus how a relentless campaign of interest rate hikes by the US Federal Reserve and other central banks - including the European Central Bank this week - was pressuring the banking sector.
SVB and Signature's collapses are the second- and third-largest bank failures in US history behind the demise of Washington Mutual during the global financial crisis in 2008.
Banking stocks globally have been battered since SVB collapsed, with the S&P Banks index falling 22%, its largest two weeks of losses since the pandemic shook markets in March 2020.
Big US banks threw a $30 billion (€28bn) lifeline to smaller lender First Republic, and US banks altogether have sought a record $153 billion (€143bn) in emergency liquidity from the Federal Reserve in recent days.
This reflects "funding and liquidity strains on banks, driven by weakening depositor confidence", said ratings agency Moody's, which this week downgraded its outlook on the US banking system to negative.
While support from some of the titans of US banking prevented First Republic's collapse, investors were startled by disclosures on its cash position and how much emergency liquidity it needed.
In Washington, focus has turned to greater oversight to ensure that banks and their executives are held accountable.
US President Joe Biden called on Congress to give regulators greater power over the sector, including imposing higher fines, clawing back funds and barring officials from failed banks.
