BankingBusiness

UBS agrees ’emergency rescue’ of Credit Suisse

Sunday's announcement came after a weekend of emergency talks in Switzerland between the two banks and the country's financial regulators

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 was the best way to restore the confidence of financial markets and to manage risks to the economy.

Credit Suisse said it was 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 told the BBC.

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 (£2.6bn).

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. The chairmen of both banks spoke at a news conference in Bern on Sunday

Axel Lehmann (L), Chairman Credit Suisse, speaks next to Colm Kelleher (R), Chairman UBS, during a press conference in Bern, Switzerland

The merger comes amid fears over the global banking system, with Credit Suisse being the latest casualty of a crisis of confidence that has seen two mid-sized US banks fail and another propped up by emergency funding.

In a statement, Switzerland’s central bank said “a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation”.

The federal government said in order to reduce any risks for UBS it would grant a guarantee against potential losses worth $9.6bn.

The Swiss central bank has also offered liquidity assistance of up to $110bn.

Global financial institutions were quick to praise the deal.

The Bank of England said it welcomed the “comprehensive set of actions” set out by the Swiss authorities.

“We have been engaging closely with international counterparts throughout the preparations for today’s announcements and will continue to support their implementation.”

It said the UK banking system was “well capitalised and funded, and remains safe and sound”.

Central banks to boost flow of US dollars
The UK Treasury also said it welcomed the merger and the British government would continue to engage with the Financial Conduct Authority (FCA) and the Bank of England “as is usual”.

The FCA said on Sunday it was “minded to approve” the takeover to support financial stability as both UBS and Credit Suisse have operations in London.

“The FCA continues to engage closely with UK and international regulatory partners to monitor market developments,” the watchdog said.

Christine Lagarde

Christine Lagarde, President of the European Central Bank, said she welcomed the “swift action” of the Swiss authorities.

“They are instrumental for restoring orderly market conditions and ensuring financial stability.

“The euro area banking sector is resilient, with strong capital and liquidity positions,” Ms Lagarde said.

The comments from the European Central Bank President were echoed in the US.

Treasury Secretary Janet Yellen and Federal Reserve Board chairman Jerome Powell both said the announcement by the Swiss authorities supported “financial stability”.

“The capital and liquidity positions of the US banking system are strong, and the US financial system is resilient”, they said.

 

 

Asaase Radio 99.5 broadcasts on radio via 99.5 in Accra, 98.5 in Kumasi, 99.7 in Tamale, 100.3 in Cape Coast and on our affiliates Bawku FM 101.5 in Bawku, Beats FM 99.9 in Bimbilla, Somua FM 89.9 in Gushegu, Stone City 90.7 in Ho, Mining City 89.5 in Tarkwa and Wale FM 106.9 in Walewale
Tune in or log on to broadcasts 
online: www.asaaseradio.com, Sound Garden and TuneIn
Follow us on Twitter: @asaaseradio995
Live streaming: facebook.com/asaaseradio99.5. Also on YouTube: Asaase Radio Official.
Join the conversation. Call: 020 000 9951 or 059 415 7777. Or WhatsApp: 020 000 0995.

#AsaaseRadio
#TheVoiceofOurLand

Source
BBC
Show More

Related Articles

Back to top button

Adblock Detected

ALLOW OUR ADS