Major bank merger
UBS takes over ailing Credit Suisse
03/19/2023, 7:38 p.m
As the weekend progressed, it became increasingly clear that the major Swiss bank UBS was taking over its struggling rival Credit Suisse. After tough negotiations, the breakthrough is finally announced: the deal is made. The Swiss President speaks of a loss of confidence.
The future of Credit Suisse has been decided. The badly hit bank is taken over by the larger local rival UBS. This was announced by the Swiss Federal Council and representatives of the two institutes and the supervisory authorities at a press conference in the evening. The Swiss National Bank (SNB) is supporting the takeover with liquidity assistance of CHF 100 billion (around EUR 101 billion) to both banks.
In order to reduce any risks for UBS, the federal government is also issuing a guarantee of CHF 9 billion to cover potential losses, it said in Bern. The measures taken will ensure that the SNB can provide Credit Suisse with extensive liquidity if necessary.
Credit Suisse has lost the confidence of the financial markets, said Swiss President Alain Berset. The takeover by UBS is the best solution to restore trust. The Presidents of the Boards of Directors of the two banks, Colm Kelleher and Axel Lehmann, the head of the Swiss financial regulator Finma, Marlene Amstad, Central Bank President Thomas Jordan and Swiss Finance Minister Karin Keller-Sutter also took part in the press conference.
“With the takeover of Credit Suisse by UBS, a solution was found to ensure financial stability and protect the Swiss economy in this extraordinary situation,” the SNB said in a statement. This contributes to the stability of the entire financial sector. Finma approved the takeover. Both banks could continue all business activities.
A takeover of the second largest Swiss bank Credit Suisse by UBS is the most significant banking merger in Europe since the financial crisis 15 years ago. This was preceded by a marathon of negotiations that lasted the whole weekend, in which the parties involved from the two banks as well as top representatives from politics and the supervisory authorities took part. The Swiss government had urged UBS to take over the bank in order to restore confidence in Credit Suisse and prevent the crisis from spreading to other banks in Europe.