UBS is buying its troubled Swiss rival, Credit Suisse, for almost $3.25 billion in a deal organized by regulators to prevent further turmoil in the global banking system.
- The Swiss government is providing more than 100 billion francs ($107 billion) in aid and financial backstops to make the deal go through, AP reported.
- Credit Suisse is among the 30 financial institutions known as globally systemically important banks, and authorities were concerned about the fallout if it failed.
- European central bank president Christine Lagarde lauded the “swift action” by Swiss officials, saying they were “instrumental for restoring orderly market conditions and ensuring financial stability.”
- Following news of the Swiss deal, the world’s central banks announced coordinated financial moves to stabilise banks in the coming week. UBS officials said they plan to sell off parts of Credit Suisse or reduce the bank’s size in the coming months and years.
- The combination of the two biggest and best-known Swiss banks amounts to a thunderclap for Switzerland’s reputation as a global financial center, leaving it on the cusp of having a single national champion in banking.
- The Swiss executive branch passed an emergency ordinance allowing the merger to go through without shareholder approval. As part of the deal, around 16 billion francs in Credit Suisse bonds will be wiped out.
- The Swiss finance minister, Karin Keller-Sutter, said the council “regrets that the bank, which was once a model institution in Switzerland and part of our strong location, was able to get into this situation at all”.
- UBS’s chairman, Colm Kelleher, hailed the “enormous opportunities” that emerge from the takeover, highlighting his bank’s “conservative risk culture”.