Swiss bank UBS takes over Credit Suisse
Dhe major Swiss bank UBS takes over the ailing Credit Suisse. UBS announced this, the Swiss National Bank SNB announced on Sunday evening.
The SNB is supporting the takeover with extensive liquidity support, the central bank announced on Sunday evening. A loan totaling up to CHF 100 billion (around EUR 101 billion) will be granted. In order to reduce risks for UBS, the federal government is also issuing a guarantee of CHF 9 billion to cover potential losses. The measures will ensure that the SNB can provide Credit Suisse with extensive liquidity if necessary.
The purchase price for Credit Suisse is three billion francs and will be paid in treasury shares, UBS said. The merged bank will manage more than $3.4 trillion in assets. The price represents a fraction of Credit Suisse’s market capitalization at Friday’s close, which was CHF 7.4 billion. According to the “Financial Times”, the Swiss government is also planning a change in the law to avoid a vote by Credit Suisse shareholders.
Lost confidence in the financial markets
Credit Suisse has lost the confidence of the financial markets, said Swiss President Alain Berset at a press conference scheduled at short notice. The takeover by UBS is the best solution to restore trust. The Presidents of the Boards of Directors of the two banks, Colm Kelleher and Axel Lehmann, the head of the Swiss financial regulator Finma, Marlene Amstad, Central Bank President Thomas Jordan and Swiss Finance Minister Karin Keller-Sutter also took part in the press conference.
“With the takeover of Credit Suisse by UBS, a solution was found to ensure financial stability and protect the Swiss economy in this extraordinary situation,” the SNB said in a statement. This contributes to the stability of the entire financial sector. Finma approved the takeover. Both banks could continue all business activities.
The takeover plan, negotiated in a hurry over the weekend, is aimed at preventing a collapse of Credit Suisse after stocks and bonds plummeted last week. A liquidity aid Swiss National Bank had only helped in the short term. Accelerating the flight of customers and counterparties might have spread further.
According to circles, the US financial authorities have also gotten involved in the talks, since both financial institutions are active in the USA and in the United States Switzerland are considered systemically important. The deal should be in place before markets reopen in Asia.
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