bank giant UBSMore buy out an ailing rival credit suissein a snap trade brokered by Swiss authorities to avoid further turmoil in the market after a series of high-profile financial failures.
Swiss market watchdog Finma has approved a £2.7bn takeover. This comes after desperate talks between bank bosses and ministers desperate to secure a deal before trading opens on Monday.
A source familiar with the negotiations said FT In terms heavily influenced by the Swiss National Bank (SNB) and Finma, contact between the two banks was limited.
Switzerland-based international investment bank UBS will pay CHF3bn (£2.66bn) to buy a smaller rival, but this is expected under less urgent circumstances. far below the market price.
In a statement, SNB and government officials said the deal represented “a solution to ensure financial stability and protect the Swiss economy in this exceptional situation”.
Swiss President Alain Berset called the announcement “very wide-ranging for international financial stability. An uncontrolled collapse of Credit Suisse would have devastating consequences for the country and the international financial system. ”
Credit Suisse, 167, was pushed to the brink of a financial crisis this week. £45bn emergency financing pious SwitzerlandCentral Banks After Stocks Crash investor concerns.
The loans were agreed in a move intended to reassure the market and depositors, but failed to stop the rush of withdrawals by account holders, prompting the Swiss government to seek a merger.
Credit Suisse is one of 30 so-called systemic global banks considered important to the world’s financial structure. Industry experts expect the issue to have ripple effects for banks around the world.
Sunday’s press conference was spurred by an enthusiastic and widespread response from the U.S. government to prevent further banking panic following the collapse of two major U.S. banks last week.
At least two major European banks are considering a contagion scenario in the continental banking sector, with the Federal Reserve and ECB seeking stronger signals of support, close to debate 2 senior executive told Reuters.
The confidence crisis in Credit Suisse and the collapse of two U.S. banks are feared to ripple through the financial system next week, two executives separately told Reuters on Sunday.
Credit Suisse is one of the largest investment banking employers in the City of London, employing approximately 5,000 people. It’s unclear what the acquisition means for the bank’s global workforce, but sources told Reuters earlier in the weekend that UBS could be forced to cut 10,000 of his jobs. .
The central banks of the US, UK and Switzerland will all hold meetings scheduled this week.
Despite still high inflation, the bank turmoil forced traders to quickly reset their expectations for further rate hikes.
More to come…
