Switzerland’s largest bank UBS will take over its rival Credit Suisse, whose problems have begun to threaten the financial system. This was announced at a press conference on Sunday by representatives of the Swiss government, central bank and regulatory authorities. It is one of the largest transactions in the banking sector in decades. To strengthen liquidity, the central bank will provide up to 100 billion francs, equivalent to approximately 2.4 trillion crowns.
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Credit Suisse logo in front of the Swiss Parliament building in Bern | Photo: Denis Balibouse | Source: Reuters
The Swiss UBS will take over the rival bank Credit Suisse for roughly three billion francs (almost 73 billion crowns), which it will pay with its shares. The banks announced this at a joint press conference with representatives of the government, central bank and regulatory authorities on Sunday.
UBS said it was too early to speculate on how many people would lose their jobs in the deal. Informed sources have so far said that up to 10,000 jobs could be lost.
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“With the takeover of Credit Suisse by UBS, we have found a solution that will ensure financial stability and protect the Swiss economy in this exceptional situation,” the central bank said.
Swiss President Alain Berset said that rescuing Credit Suisse so that it could survive without the help of another bank was no longer possible because of the loss of confidence. According to the Ministry of Finance, the chosen solution is the least painful for the Swiss Confederation and for its taxpayers than the other option.
Credit Suisse, which was founded in 1856, has paid the price for bad management decisions in the past as well as for scandals in its investment banking business. Her bond was broken only by the crisis of confidence this week, when clients began withdrawing deposits en masse.
Swiss authorities were scrambling to present a solution for Credit Suisse before trading on exchanges in Asia opens on Monday morning. There were fears that if the matter was not resolved by then, jitters would prevail in the markets and the major stock indexes would fall sharply. This would mean economic losses for individuals, companies and governments.
Credit Suisse is one of the largest asset managers in the world, provides services primarily to wealthy individuals, and is considered one of the thirty systemically important banks in the global financial architecture. It is the second largest bank in Switzerland.
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