- On Sunday afternoon, UBS announced the purchase of Credit Suisse for $3.2 billion.
- The agreement says that Credit Suisse shareholders will receive 1 share of UBS bank (also Swiss) for every 22.50 shares of the disgraced entity they own.
- The Swiss National Bank promised a loan of 108 billion dollars to support the purchase.
Over the weekend, when many were watching what was happening at the Saudi Arabian Grand Prix and the victory that Checo Pérez finally took, in Bern, one of the biggest bailouts in the history of world banking was “cooking” .
That’s how it is, Swiss UBS has agreed to buy out its embattled rival Credit Suissefor 3 billion Swiss francs (about 3.21 billion dollars).
For many analysts, the acquisition is just a disguise for a state bailout, as Swiss regulators played a key role in the deal and that the Swiss National Bank, the country’s central bank, will provide an unprecedented credit of 108 billion dollars to support the purchase.
“With the purchase of Credit Suisse by UBS, a solution has been found to ensure financial stability and protect the Swiss economy in this exceptional situation,” says the statement that the Swiss National Bank made public on Sunday, after announcing the which for many is a merger of the two largest banks in that country.
Under the deal, holders of Credit Suisse shares will receive one UBS share for every 22.50 Credit Suisse shares they hold.
Both banks combined will now have $5 trillion in invested assets, UBS said.
In addition to the contribution of a loan for up to 108 billion dollars from the Swiss monetary authority, the Swiss government provided a guarantee to bear losses of up to 9 billion Swiss francs in assets “with the idea of reducing any risk for UBS,” the Swiss state said in a separate statement.
UBS saves Credit Suisse with help from Switzerland
The deal was closed in Bern on Sunday afternoon between Axel Lehman, Chairman of Credit Suisse; Colm Kelleher, Chairman of the UBS Group; Karin Keller-Sutter, Finance Minister of Switzerland; Alain Berset, President of Switzerland; Thomas Jordan, President of the Swiss National Bank; and Marlene Amstad, President of the Swiss Financial Market Supervisory Authority.
According to Keller Sutter, it was a “commercial solution, not a bailout,” but few analysts believe him.
The agreement was sealed before the financial markets opened this Monday, March 20 with the idea of calming the waters, but it did not happen.
European stock markets they woke up down, with strong falls of all the banks of that region.
Credit Suisse shares, for example, fell 60% and UBS shares another 10%.
The news of the agreement was welcomed by the United States Secretary of the Treasury, Janet Yellen, and by the Federal Reserve Chairman, Jerome Powell, who in a statement clarified that “the capital and liquidity position of the United States banking system United is solid.”
Now read:
Pfizer buys Seagen for US $ 43,000 million: this we know
HSBC rescues and buys part of SVB, the Silicon Valley bank that failed
Subway sale could be the first big corporate news of 2023