UBS buys Credit Suisse for over three billion

UBS compra o Credit Suisse por mais de três mil milhões

To ?big to fail?. This is the explanation for a crazy weekend, after a week that made 2.5 billion euros of Credit Suisse's stock market value disappear.

UBS has agreed to buy Credit Suisse for more than three billion euros, an emergency solution among private parties, but without going through the approval of the respective shareholders, supported by liquidity lines and backstops from public authorities, to avoid a liquidity crisis already at the beginning of the week and a disorderly bankruptcy.

So the deal between Switzerland's two biggest banks was announced at a press conference this Sunday night and will be priced at a fraction of Credit Suisse's closing price on Friday. This after a week of turbulence that ?wiped? 2.5 billion Swiss francs off the institution's stock market value.

In an extended press conference, and quoted by Eco, already late on Sunday, the details of the Credit Suisse ?take over? operation by the rival Swiss bank, UBS, were announced, which will end up creating an even bigger bank than the existing ones. It was the possible formula to avoid bankruptcy without a public bailout.

The Swiss National Bank has agreed to offer a liquidity line of up to 100 billion euros to UBS as part of the deal, they confirmed at the press conference after the news broke by the FT. In addition he said, the Swiss government itself has agreed to provide a guarantee of around nine billion euros to cover potential Credit Suisse credit losses.

According to the information provided at this press conference, Ralph Hamers will be the CEO of the combined UBS/Credit Suisse bank, and it was also made clear that there can be no dividend distribution and no bonuses for the period of the public assistance in the form of liquidity line and guarantee for possible credit losses.

The deal for the purchase of Credit Suisse by UBS is already getting international reactions, namely from the US, the European Central Bank and the UK. The US Treasury Secretary Janet Yellen said that the US welcomes this deal and assures that the US financial system is in a solid position. The president of the ECB, Lagarde, praised the response of the Swiss authorities and considered that the conditions are in place to restore financial stability in the markets.

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