UBS, Switzerland’s Biggest Bank To Purchase Credit Suisse In A Rescue Deal for $3.25 Billion

Recently, it has been announced that the most prominent UK Bank, UBS will take over its troubled Swiss rival Credit Suisse with a valuation of 3.25 billion USD. The decision has been taken surrounding the crunch to prevent the stricken bank’s collapse to lay out the banking crisis further.

The UK government has addressed the matter stating that the agreement involving Switzerland’s largest bank was integral to preventing an irreplaceable economic crisis that would expand in the country and beyond.
The move was welcomed in the areas that would support financial stability, including Brussels, Washington, and London.

The takeover details of Credit Suisse were announced at a press conference after conducting long discussions with the finance ministry in the capital and before the market opening in Asia and Europe.
Credit Suisse’s president Alain Berset was sided by the UBS Chairman Colm Kelleher and his Credit Suisswpartner Axel Lehmann, along with the nation’s Finance Minister and the head of the Swiss National Central Bank and FINMA.

Switzerland has been prominent for its banking performance, and Berset has stated that the acquisition was the best solution for bringing back the confidence lacking in the financial markets now.

He has further added that if Credit Suisse went into freefall, it would mean incalculable results for the country and the stability of international finance.

Credit Suisse has shared in a statement that UBS would take over the bank for a merger agreement worth three billion Swiss francs. Furthermore, the shareholders of the bank would receive one UBS share for every 22.48 Credit Suisse shares.

Lehmann has stated the takeover has been the best decision amidst the extraordinary and unpredictable situation.

Finance Minister Karin Keller-Sutter has addressed the bankruptcy of Credit Suisse and has stated that it could cause an irreparable economic crisis and increased collateral damage for the Swiss Financial market. It could possess a risk of spreading to other international banks.

The takeover has installed the foundation for increased stability in the international market.

The agreement was looked up internationally. The Chief of the European Central Bank has called the decision a swift action. She has added that the decisions taken in Bern are integral to restoring market stability and ensuring financial stability. The European banking industry is resilient, with strong capital and positions of liquidity.

Jerome Powell, Fed chairman, and Treasury Secretary Janet Yellen have mentioned in a joint statement that they welcome the decisions by the Swiss authorities to support financial stability. Britain has added and supported the decision of the takeover.

Keller Sutter has opined that the US and British colleagues were distressed and feared that Credit Suisse would go through bankruptcy with all the losses.

The Swiss National Bank has announced that 100 billion Swiss francs in liquidity will be available, and the finance minister has stated that the agreement was a commercial solution and not necessarily a bailout.

The Chairman of UBS has talked about the takeover stating that they are committed to making the agreement a great success. It is integral to the financial structure of Switzerland. He has stated that UBS will overcome the crisis.

Credit Suisse was among the list of 30 most prominent banks around the world and has been termed a Global Systematically Important Bank. They have been considered an important international banking system that is too big to collapse. But, the market trends have revealed that the bank was considered a weak link in the chain.

After the collapse of the two US banks, Credit Suisse’s shares declined by 30 percent. Moreover, in 2022, the bank suffered a massive loss of 7.9 billion USD and expected a pre-loss every year.

The Swiss Bank Employees Association has talked about the situation, calling there was a great agreement at stake for the employees of the company and the economy. They have added that the collapse would mean the increased risk of loss of tens of thousands of jobs.

But why did UBS take over Credit Suisse?

Switzerland’s financial sector is one of the most prominent arenas globally accounting for 8.7 million population. The acquisition could change the fate of the country’s vital banks, which are of utmost concern to the government.

UBS has gained the agreement of the lifetime. Stakes of the bank have increased by 70 percent after the commercial takeover. The acquisition will assist the banks in expanding among wealth management clients in Latin America and Asia. It will open the door for direct investment banking.

It means that the takeover of Credit Suisse is not only a door to the financial stability of the economy, and it will help UBS to broker more investments from global ultra-rich families.

edited and proofread by nikita sharma