Emergency Buyout of Credit Suisse by roval UBS
BERN - Troubled bank Credit Suisse has been rescued by its Swiss rival UBS in a government-backed deal.
Sunday's announcement came after a weekend of emergency talks in Switzerland between the two banks and the country's financial regulators. The Swiss National Bank said the deal is the best way to restore the confidence of financial markets and to manage risks to the economy.
Credit Suisse said it is not expecting "any disruption to client services". "We are fully focused on ensuring a smooth transition and seamless experience for our valued clients and customers," a spokesperson for the bank said.
Credit Suisse shareholders were deprived of a vote on the deal and will receive one share in UBS for every 22.48 shares they own, valuing the bank at $3.15bn. At the close of business on Friday Credit Suisse was valued at around $8bn.
But the deal has achieved what regulators set out to do - secure a result before the financial markets opened on Monday.
Meanwhile, central banks have moved globally to keep credit flowing after an unsettled period in the US banking sector and the Credit Suisse merger. Six central banks have announced they will boost the flow of US dollars through the global financial system. The US dollar liquidity "swap line" arrangement will run from Monday.
In a statement the Bank of England, Bank of Japan, Bank of Canada, the European Central Bank, US Federal Reserve and Swiss National Bank launched the co-ordinated action to "enhance the provision of liquidity". The announcement said it serves as an "important backstop to ease strains in global funding markets" and to lessen the impact on the supply of credit to households and businesses.
Instead of borrowing on the open market, British banks will be able to go direct to the Bank of England, and it will borrow from the US Federal Reserve. It will work in the same way for banks in the eurozone, Canada, Japan, Switzerland and the US. Banks will be able to access this funding on a daily basis.
Global banking stocks slumped after the collapse of Silicon Valley Bank, despite reassurances from President Joe Biden the US would do "whatever is needed" to protect the banking system. Since SVB's collapse, the smaller Signature Bank also fell by the wayside and First Republic needed rescuing.
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