Axel Lehmann, chairman of Credit Suisse Group AG, left, and Colm Kelleher, chairman of UBS Group AG, during a news conference in Bern, Switzerland, on Sunday, March 19, 2023.
Pascal Mora | Bloomberg | Getty Images
In equal parts “shotgun wedding” and arranged marriage, UBS agreed to buy stricken domestic rival Credit Suisse for 3 billion Swiss francs ($3.25 billion) on Sunday.
Despite bold proclamations from Swiss authorities and central banks about a return to stability, the deal does not appear to have laid to rest concerns about systemic risks to global markets.
After years of heavy losses and costly scandals, Credit Suisse’s most recent share price plunge began with the collapse of U.S.-based Silicon Valley Bank and Signature Bank and was compounded when top investor the Saudi National Bank said it could not provide any more financial assistance.
The announcement of a loan of up to 50 billion Swiss francs from the Swiss National Bank failed to soothe investor concerns and eventually necessitated the 167-year-old institution’s “emergency rescue” by UBS.
Credit Suisse Chairman Axel Lehmann told a press conference Sunday that the “latest developments that emanated from the banks in the U.S. hit us at the most unfavorable moment.”
“The accelerating loss of confidence and the escalation over the last few days have made it clear that Credit Suisse can no longer exist in its current form,” Lehmann said.
“We are happy to have found a solution, which I’m convinced will bring lasting stability and security for clients, staff, financial markets and to Switzerland.”
The cut-price deal is expected to close this year and creates a banking behemoth with more than $5 trillion in total invested assets. The deal also includes support from the Swiss government, financial regulator FINMA, and the Swiss National Bank (SNB), which will offer a liquidity line of up to 100 billion Swiss francs, backed by a federal default guarantee. The government will offer a loss guarantee of up to 9…
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