Credit Suisse bank : UBS is in talks to take over its troubled rival

spiral, in which it finds it much harder to undertake its banking activities.

“That could raise questions about other banks at a time when there are also banking concerns in the United States.”

Mr El-Erian said the current turmoil could lead to banks becoming more “risk averse”, leading to a fall in credit availability.

But that amounted to a “headwind” for the global economy, rather than something like the sudden stop experienced during the 2008 financial crisis, which was “in a completely different league” to today’s problems, he said.

UBS is said to have asked the Swiss government to cover about $6bn (£4.9bn) in costs if it were to buy Credit Suisse, according to sources quoted by Reuters.

Credit Suisse reported a loss of 7.3bn Swiss francs ($7.9bn; £6.5bn) in 2022 – its worst year since the financial crisis of 2008 – and has warned it does not expect to be profitable until 2024.

UBS, however, made a profit of $7.6bn in 2022.

Any deal may also result in significant job losses.

As well as being a domestic bank with 95 branches, Credit Suisse has a global investment banking operation and manages the assets of rich clients.

At the end of last year Credit Suisse had a global staff of 50,480, including 16,700 in Switzerland, though 9,000 jobs were to be axed, the Swiss broadcaster SRF reports.