UBS agrees to buy troubled Credit Suisse for more than $2B to ‘secure financial stability’

Switzerland’s largest bank, UBS, has agreed to buy rival Credit Suisse for more than $2 billion in an emergency deal to avoid disruptions caused by the current banking crisis.

The Swiss National Bank announced the deal on Sunday, saying it would “ensure financial stability and protect the Swiss economy” following the global market panic after the collapse of US Silicon Valley Bank and its signatories. Did.

Credit Suisse shares plunged 25% last week, triggering a flood of banks with customers that resulted in a total of $10 billion in daily withdrawals, according to the Financial Times.

To prevent a full-blown meltdown on Monday, Swiss officials agreed to expedite the UBS takeover, providing Credit Suisse with a $100 billion liquidity line as part of the deal. .

The deal comes just a day after a meeting between UBS and the Swiss National Bank, where the company first offered a $1 billion acquisition. UBS will now pay approximately 54 cents per share to secure the deal.

UBS has agreed to buy rival Credit Suisse for more than $2 billion.

Swiss National Bank
The Swiss National Bank said it would “ensure financial stability and protect the Swiss economy”.

UBS and Credit Suisse are among the world’s top 30 banks, with combined assets of approximately $1.7 trillion, and are both headquartered in Zurich.

Credit Suisse was the bank that had a better footing 15 years ago during the 2008 financial crisis, and UBS was the bank that needed government backing at the time.

But Credit Suisse’s share price has fallen 84% over the past two years, while UBS’s share price has risen 15%.

Credit Suisse, Switzerland’s second largest bank, employs more than 50,000 people at the end of 2022.

Thomas Jordan, President of the Swiss National Bank
Swiss National Bank Chairman Thomas Jordan attends a Credit Suisse press conference after UBS’s proposed takeover.
Reuters/Dennis Bariboot

Banks saw their shares plummet 30% overnight Wednesday, following market fears over the SVB and the collapse of undersigned banks, with the Swiss National Bank providing a $54 billion lifeline that banks were unable to save. bottom.

S&P Global is expected to downgrade First Republic Bank again less than a week after the initial downgrade following a merger of the Swiss banking giants.

the source told bloomberg The rating agency will announce a downgrade from BB+ to B+ only this week, just days after it was demoted from A-, due to the impact of the current banking crisis.

Chairman of the UBS Board of Directors
Swiss officials agreed to facilitate the acquisition of UBS and provided Credit Suisse with a $100 billion liquidity line as part of the deal.
Reuters/Dennis Bariboot

“With $30 billion in uninsured deposits and cash on hand at 11 of the nation’s largest banks, First Republic Bank is well-positioned to manage short-term deposit activity,” the bank said in a statement. He said. “This support reflects our trust in First Republic and its ability to continue to provide unwavering superior service to our clients and community.”

The S&P did not respond to the Post’s request for comment on Sunday.

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