The two largest banks in Switzerland are now preparing to carry out a merger as part of a deal that the nation’s regulators pushed as a means to establish stability in the wake of extreme volatility throughout financial institutions around the globe.
As the larger of the two banks, UBS officially agreed this past weekend to buy out its flailing competitor, Credit Suisse, for a sum of roughly $3 billion, as reported by The Wall Street Journal.
“With the takeover of Credit Suisse by UBS, a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation,” explained the Swiss National Bank.
The full details regarding this arrangement have not been made public as of writing, but a report from the Financial Times explained that Swiss authorities were attempting to take steps to speed up the process by altering laws to get around a vote by shareholders.
To go along with this, the Swiss National Bank claimed that it would put forth its own loan of close to 100 billion Swiss Francs — roughly a sum of $108 billion — in support of the takeover, and the government of Switzerland also stepped in to cover a sum of 9 billion francs — equivalent to $9.7 billion USD — when it comes to the possible losses for assets being incorporated by UBS, as per CNBC.
Alain Berset, the Swiss President, stated that the deal is “one of great breadth for the stability of international finance,” explained a report from the Associated Press. “An uncontrolled collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system.”
The Financial Stability Board — which is a group that watches over and assesses the whole of the global financial system — considers Credit Suisse to be part of a list of 30 banks marked as “systemically important.”
Due to the value of its shares dropping by close to 75% over the past 12 months, Credit Suisse was tossed a lifeline of roughly 50 billion francs, about $54 billion, from the Swiss central bank this past week, but CNN issued a report that did not give investors any kind of secure reassurance. The total buyout price reported this past Sunday would be less than half of the massive 7.4 billion francs Credit Suisse was worth at the close of trading as of this past Friday, read a report from Bloomberg News.
Sitting at close to 167 years old, Credit Suisse reportedly sported about 50,000 employees by the end of 2022 while UBS has roughly 74,000 employees scattered around the world.
