UBS Takes Over Credit Suisse In Move To Calm The Markets
Fahad Shabbir (@FahadShabbir) Published March 20, 2023 | 06:54 PM
UBS is set to take over its troubled Swiss rival Credit Suisse for $3.25 billion following weekend crunch talks aimed at stopping the stricken bank from triggering a wider international banking crisis
Bern, Switzerland, (UrduPoint / Pakistan Point News - 20th Mar, 2023 ):UBS is set to take over its troubled Swiss rival Credit Suisse for $3.25 billion following weekend crunch talks aimed at stopping the stricken bank from triggering a wider international banking crisis.
The deal, in which Switzerland's biggest bank will take over the second largest, was vital to prevent economic turmoil from spreading throughout the country and beyond, the Swiss government said.
The move was welcomed in Washington, Frankfurt and London as one that would support financial stability, after a week of turbulence following the collapse of two US banks.
After a dramatic day of talks at the finance ministry in Bern -- and with the clock ticking towards the markets reopening on Monday -- the takeover was announced at a press conference.
Swiss President Alain Berset was flanked by UBS chairman Colm Kelleher and his Credit Suisse counterpart Axel Lehmann, along with the Swiss finance minister and the heads of the Swiss National Bank (SNB) central bank and the financial regulator FINMA.
The wealthy Alpine nation is famed for its banking prominence and Berset said the takeover was the "best solution for restoring the confidence that has been lacking in the financial markets recently".
If Credit Suisse went into freefall, it would have had "incalculable consequences for the country and for international financial stability", he said.
Credit Suisse said in a statement that UBS would take it over for "a merger consideration of three billion Swiss francs ($3.25 billion)".
After suffering heavy falls on the stock market last week, Credit Suisse's share price closed Friday at 1.86 Swiss francs, with the bank worth just over $8.7 billion.
UBS said Credit Suisse shareholders would get 0.76 Swiss francs per share.
"Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome," Lehmann said.
By Monday's opening, most Asian equity markets fell in early trade, with Hong Kong, Tokyo, Sydney, Seoul and Singapore all in the red.
Hong Kong's monetary authority sought to calm jitters Monday morning, saying that "exposures of the local banking sector to Credit Suisse are insignificant", as the bank's assets make up "less than 0.
5 percent" of the city's banking sector.
Following Sunday's crunch talks and announcement, Swiss Finance Minister Karin Keller-Sutter said that bankruptcy for Credit Suisse could have caused "irreparable economic turmoil" and "huge collateral damage" for the Swiss financial market.
With the "risk of contagion" for other banks, including UBS itself, the takeover has "laid the foundation for greater stability both in Switzerland and internationally", she said.
The deal was warmly received internationally.
European Central Bank chief Christine Lagarde welcomed the "swift action".
The decisions taken in Bern "are instrumental for restoring orderly market conditions and ensuring financial stability," she said.
"The euro area banking sector is resilient, with strong capital and liquidity positions." US Federal Reserve chair Jerome Powell and Treasury Secretary Janet Yellen said in a joint statement: "We welcome the announcements by the Swiss authorities today to support financial stability." The sentiment was echoed by British Finance Minister Jeremy Hunt.
Keller-Sutter said her US and British colleagues "really feared that there could be a bankruptcy of Credit Suisse, with all the losses".
The Fed and the central banks of Canada, Britain, Japan, the EU and Switzerland announced they would launch a coordinated effort on Monday to improve banks' access to liquidity, hoping to calm worries rattling the global banking sector.
The SNB announced that 100 billion Swiss francs of liquidity would be available for the UBS-Credit Suisse takeover.
Keller-Sutter insisted the deal was "a commercial solution and not a bailout".
The takeover creates a banking giant such as Switzerland has never seen before -- and raises concerns about possible layoffs.
UBS chairman Kelleher said: "We are committed to making this deal a great success.
"UBS will remain rock solid," he insisted.
Related Topics
Recent Stories
Rock-solid Ruud racks up season-leading win in Barcelona
At UN, Iran says it will make Israel 'regret' reprisals
G7 hears calls for 'critical' Ukraine aid
EU seeks to leverage might to confront China, US challenge
5 Customs officials martyred as their vehicle ambushed by terrorists in D I Khan
Pak-New Zealand match called off due to rain
NHA restores traffic on roads affected by recent rains in Balochistan
China to fully support Pakistan's efforts against terrorism: Ambassador Jiang
U.S. envoy calls on Foreign Minister Ishaq Dar
Poland arrests man over suspected plan to kill Zelensky
EU wants to ease youth movement to and from UK
Police foils attempt of supply mainpuri raw material
More Stories From Business
-
Pakistan's total liquid foreign reserves reach $ 13.37 billion
7 hours ago -
Stock markets rise as traders consider US rate outlook
8 hours ago -
Business community alarmed by alleged Cigarette tax violations
8 hours ago -
High FED on cigarettes demonstrates positive impact
8 hours ago -
PTCL posts 14 % revenue growth
8 hours ago -
Prudent policies, reforms poised to result in sustainable economic growth: Governor State Bank of Pa ..
9 hours ago
-
ICCI resolute to turn Islamabad an ecofriendly city: Khalid Malik
9 hours ago -
Beijing's GDP up 6 pct in Q1
11 hours ago -
China's Q1 goods, services trade surplus exceeds 60 bln USD
11 hours ago -
Pakistan Stock Exchange (PSX) loses 43 points
11 hours ago -
KP Govt decides to establish Gem Processing & Export Centre
11 hours ago -
Rupee sheds 04 paisa against dollar
11 hours ago