ZURICH - Talks to contain the crisis of confidence in Credit Suisse Group AG extended into Sunday, with Swiss officials and UBS Group AG racing to put together a deal to take over or break up the battered lender before markets open in Asia.

The parties are seeking to navigate thorny issues such as a government backstop and the fate of Credit Suisse’s investment bank, after UBS put aside its initial opposition to a deal with the smaller rival, people briefed on the discussions said.

UBS is asking the Swiss government to take on certain legal costs and potential future losses in any takeover, said the people, with one report putting the figure at about US$6 billion.

The complex discussions over what would be the first combination of two global systemically important banks since the financial crisis have seen Swiss and US authorities weigh in, some of the people said.

Talks accelerated Saturday, with all sides pushing for a solution that can be executed quickly after a week that saw clients pull money and counterparties step back from some dealings with Credit Suisse. The goal is for an announcement by Sunday evening at the latest, the people said. 

Under one likely scenario, the deal would involve UBS acquiring Credit Suisse to obtain its wealth and asset management units, while possibly divesting the investment banking division, the people said. Talks are ongoing on the fate of Credit Suisse’s profitable Swiss universal bank, which is likely appealing to UBS but may leave the country’s domestic banking sector too concentrated, the people said, asking not to be identified describing private discussions.

Representatives for UBS, Credit Suisse, and the Swiss finance ministry declined to comment.

A government-brokered deal would address a rout in Credit Suisse that sent shock waves across the global financial system over the past...