/ world today news/ One of the main world sensations in March was the almost simultaneous bankruptcy of the American banks Silvergate Bank, Silicon Valley Bank and Signature Bank, as well as the actual (but officially unannounced) bankruptcy of the Swiss bank Credit Suisse (CS). This generated active discussions in the media about the possibility of a banking crisis in the US, Europe and the world.
The collapse of Silicon Valley Bank was announced on March 10, and already on March 11, the American businessman, founder of Tesla and SpaceX, Elon Musk, allowed the purchase of the bankrupt Silicon Valley Bank (SVB). “I’m open to that idea”, Musk wrote on Twitter. It is true that the question did not go further than this statement.
Specifically, it was the intention of First Citizens, a North Carolina bank holding company, to buy out the bankrupt SVB. Bloomberg suggested that this was not the only offer to buy the bankrupt bank; Applications from potential investors were received before the end of last week. On March 19, the Federal Deposit Insurance Corporation (FDIC) met and prepared a decision to sell the bank.
In another publication, Bloomberg reported that until the American regulators could not find an adequate buyer for SVB and therefore decided to prepare the sale of the bank in parts. The acceptance of purchase requests has been extended until the end of this week. So far we are talking about two parts of the bank. The first is SVB Private Bank, which manages the capital of private clients. The second part is a “bridge bank” temporarily created by the FDIC to manage the assets and liabilities of SVB.
The fate of the other failed bank, Signature Bank, was more or less sealed. The FDIC announced that part of the assets of this bank are being acquired by New York Community Bank (included in the list of the largest American banks; assets at the end of 2022 – 87 billion dollars).
NYCB will buy the failed bank’s assets for a total of $38.4 billion, including $12.9 billion worth of loans (buying the latter at a $2.7 billion discount). The buyer will get 40 Signature Bank branches. About $60 billion of the bankrupt’s assets will remain with the FDIC for now, which will sell them on a competitive basis.
As for the Swiss bank CS, in the past week several options were indicated for the rescue of this famous credit organization, which for a century and a half was at the top of the banking system of the Alpine republic together with the bank UBS. Initially, the main option was to shred the CS and sell it in parts. However, this option was abandoned. Until late last week, the main option was for Credit Suisse to be bought by UBS. In fact, we are talking about a takeover, although for some reason in the media it is called “merger of two banks”.
The Financial Times reported that financial holding company UBS Group AG is ready to buy Credit Suisse for up to $1 billion. UBS Group AG has agreed to buy all of Credit Suisse’s shares at a price of 0.25 Swiss francs ($0.27) per share. By the way, trading in Credit Suisse shares on March 17 ended at 1.86 francs. The discount is as much as 87%!
At the same time, the purchase of all Credit Suisse shares must be done not with money, but with UBS securities. A little later, the Financial Times newspaper reported that as a result of tense negotiations, the authorities managed to convince the management of UBS to acquire Credit Suisse (CS) at a higher price – for 2 billion dollars.
And here’s the latest information at the moment: UBS has agreed to pay a price of 0.76 Swiss francs per share. Thus, the total amount of the transaction is now 3 billion francs (3.24 billion dollars) at a market price of CS equal to 8 billion dollars.
It is noteworthy that the transaction was not the result of free negotiations between the two banks. Neither UBS nor Credit Suisse (CS), which had been in a state of silent competition for a century and a half, wanted this option, but the authorities insisted on it. The transaction was planned by the regulators – the Swiss National Bank and the Swiss Financial Market Supervisory Authority (FINMA).
To bypass the vote of shareholders (who are likely to vote against) and to avoid the long (six-week) procedure to decide on the deal, the Swiss government plans to change the law.
Due to the unprecedented pressure on the two banks by the authorities, the upcoming deal was called “wedding at gunpoint”. It is true that the authorities promised that after “the wedding” the married couple can count on receiving a loan of 100 billion Swiss francs on favorable terms to maintain liquidity. In addition, UBS received guarantees from the government for compensation in the event of financial losses from the acquisition of Credit Suisse’s non-performing assets in the amount of 9 billion francs.
Observers draw attention to the fact that the deal on the “merger of two banks” violates Swiss antimonopoly laws, since as a result of its implementation, a banking giant will emerge that will surpass all other banks in the Alpine republic, taken together in all indicators (there are 246 banks with 896 branches in the country).
The merger of UBS and Credit Suisse will lead to the creation of one of the largest global systemically important financial institutions in Europe: assets of UBS – $1.1 trillion, Credit Suisse – $575 billion. The Swiss authorities will probably have to adjust their antitrust laws as well . According to media reports, the Swiss authorities have even managed to get preliminary approval from European and American regulators for the merger between UBS and Credit Suisse.
Swiss President Alain Berset said that “the takeover of Credit Suisse by UBS is the best solution” in the current situation. According to some sources, if the deal falls through, the Swiss government is considering nationalizing Credit Suisse as a backup option.
Translation: ES
Vote with ballot No. 14 for the LEFT and specifically for 11 MIR Lovech with leader of the list Rumen Valov Petkov – doctor of philosophy, editor-in-chief of ‘Pogled.Info’ and in 25 MIR-Sofia with preferential No. 105. Tell your friends in Lovech and Sofia who to support!?
Subscribe to our YouTube channel:
and for our Telegram channel:
#fate #Silicon #Valley #Bank #bankrupt #banks #wedding #gunpoint
