Swiss National Bank has agreed to takeover its troubled rival, Credit Suisse, in a $3.2 billion emergency deal brokered by regulators in Switzerland to help prevent further instability to the global banks. File Photo by Michael Buholzer/EPA-EFE
March 19 (UPI) — Swiss National Bank has agreed to takeover its troubled rival, Credit Suisse, in a $3.2 billion emergency deal brokered by regulators in Switzerland to help prevent further instability in the global banking industry.
“UBS today announced the takeover of Credit Suisse. This takeover was made possible with the support of the Swiss federal government, the Swiss Financial Market Supervisory Authority FINMA and the Swiss National Bank,” the Swiss National Bank announced in a statement.
“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.”
Shareholders in Credit Suisse will receive one share in the Swiss National Bank for every 22.48 shares in Credit Suisse that they hold, CNBC reported.
“This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue. We have structured a transaction which will preserve the value left in the business while limiting our downside exposure,” Colm Kelleher, chairman of UBS, told CNBC.
Kelleher said the deal is “essential to the financial structure of Switzerland” as well as global finance.
Swiss Finance Minister Karin Keller-Sutter hailed the deal as a commercial solution and “not a bailout.”
Confidence in Credit Suisse plummeted last week after the collapse of two U.S. banks, the Silicon Valley Bank and Signature Bank.
The Swiss bank also acknowledged there was “material weakness” in its bookkeeping last week, CNN Business reported.
“Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome,” Credit Suisse chairman Axel Lehmann said in a statement to CNN.
“This has been an extremely challenging time for Credit Suisse and while the team has worked tirelessly to address many significant legacy issues and execute on its new strategy, we are forced to reach a solution today that provides a durable outcome.”
U.S. Treasury Secretary Janet Yellen and Jerome Powell, the chairman of the Federal Reserve, praised the deal in a joint statement Sunday.
“We welcome the announcements by the Swiss authorities today to support financial stability,” the statement reads.
“The capital and liquidity positions of the U.S. banking system are strong, and the U.S. financial system is resilient. We have been in close contact with our international counterparts to support their implementation.”
