UBS, Switzerland’s largest bank, has agreed to purchase rival Credit Suisse for greater than $2 billion in an emergency deal to avoid turmoil stemming from the present banking crisis.
The Swiss National Bank announced the deal on Sunday, saying that it might “secure financial stability and protect the Swiss economy,” following worldwide market panic after the autumn of America’s Silicon Valley Bank and Signature Bank.
Shares for Credit Suisse fell by 25% last week, stirring a bank rush by customers that resulted in withdrawal totals of $10 billion a day, the Financial Times reported.
With the intention to prevent a full blown meltdown come Monday, Swiss officials agreed to expedite the UBS takeover, offering a $100 billion liquidity line to Credit Suisse as a part of the deal.
The agreement comes only a day after a gathering between UBS and the Swiss National Bank, where the corporate initially offered $1 billion for the takeover. Now, UBS can pay about 54 cents a share of its own stock to secure the deal.
UBS has agreed to purchase rival Credit Suisse for greater than $2 billion.REUTERS
The Swiss National Bank shared that it might “secure financial stability and protect the Swiss economy.” REUTERS
UBS and Credit Suisse are among the many 30 top banks on the earth and hold about $1.7 trillion in assets together, with their company headquarters each based in Zurich.
Credit Suisse was the one on higher footing 15 years ago in the course of the 2008 financial crisis, with UBS being the bank that needed government assistance then.
But Credit Suisse has seen its shares fall by 84% over the past two years, with UBS as a substitute seeing its stock soar by 15%.
As Switzerland’s second biggest bank, Credit Suisse employed greater than 50,000 people at the tip of 2022.
Chairman of the Swiss National Bank Thomas Jordan attends a news conference on Credit Suisse after UBS takeover offer.REUTERS/Denis Balibouse
The bank saw 30% of its share price plunge overnight on Wednesday following market scares over the SVB and Signature Bank collapses, with the Swiss National Bank offering a $54 billion lifeline that was unable to avoid wasting the bank.
Together with the merger of the Swiss banking giants, S&P Global Inc. is predicted to downgrade First Republic Bank, again, lower than per week after its initial rankings cut.
Sources told Bloomberg the rankings firm will announce the downgrade from BB+ to only B+ this week, just days after demoting it from A-, as a result of the impacts of the present banking crisis.
Swiss officials agreed to expedite the UBS takeover, offering a $100 billion liquidity line to Credit Suisse as a part of the deal. REUTERS/Denis Balibouse
“Following Thursday’s uninsured deposit of $30 billion by the 11 largest banks within the country, along with money readily available, First Republic Bank is well positioned to administer short-term deposit activity,” the bank said in a press release. “This support reflects confidence in First Republic and its ability to proceed to supply unwavering exceptional service to its clients and communities.”
S&P didn’t reply to The Post’s request for comment Sunday.
