Switzerland’s largest bank UBS to buy embattled Credit Suisse for $3.2 bllion


Switzerland’s biggest bank, Union Bank of Switzerland (UBS) has agreed to take over its troubled Swiss rival Credit Suisse in an emergency rescue deal to quell the panic after the two American banks failed earlier this month. Under the terms of the all-share transaction, Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held, equivalent to CHF 0.76/share for a total consideration of 3 billion Swiss francs or $3.2 billion, UBS said in a statement on Sunday.

The Swiss National Bank (the Swiss equivalent of the US Federal Reserve), in a statement on Sunday, said, “UBS today announced the takeover of Credit Suisse. This takeover was made possible with the support of the Swiss federal government, the Swiss Financial Market Supervisory Authority, and the Swiss National Bank.”

It said the rescue would “secure financial stability and protect the Swiss economy.”

This deal came after the Swiss National Bank and the country’s top regulator, Finma, told their international counterparts they regard a deal with UBS as the only option to stop Credit Suisse from collapsing.

Banking experts said on Sunday that Credit Suisse had been losing the trust of investors and customers for years. In 2022, it recorded the worst loss since the 2008 global financial crisis. And the confidence collapsed last week after it acknowledged “material weakness” in its bookkeeping and as the demise of Silicon Valley Bank and Signature Bank spread fear about weaker institutions at a time when soaring interest rates have undermined the value of some financial assets.

Credit Suisse witnessed a fall in shares of 25% over the week. An emergency loan from the Swiss National Bank failed to stop the bleeding.

Desperate to prevent the meltdown from spreading through the global financial system on Monday, Swiss authorities had pushed hard for a private sector rescue, while reportedly considering Plan B — a full or partial nationalization.

The emergency takeover was agreed to after a day of frantic negotiations involving financial regulators in Switzerland, the United States, and the United Kingdom. UBS (UBS) and Credit Suisse rank among the 30 most important banks in the global financial system, and together they have almost $1.7 trillion in assets.

The global headquarters of UBS and Credit Suisse are just 300 yards apart in Zurich but the banks’ fortunes have been on very different paths recently.

Shares of UBS have climbed 15% in the past two years, and it booked a profit of $7.6 billion in 2022. It had a stock market value of about $65 billion on Friday, according to CNN, citing Refinitiv.

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