UBS [=$1.1 trillion] to buy beleaguered Credit Suisse [=$800 billion]
The move aims to quell fears of a growing global banking crisis.
March 19, 2023 at 2:53 p.m. EDT
The logo of Credit Suisse is pictured in front of the Swiss Parliament Building, Bern, Switzerland, March 19, 2023. (REUTERS/Denis Balibouse)
Credit Suisse, the beleaguered Swiss banking giant, has agreed to a takeover by Switzerland’s largest bank, UBS — a move aimed at staving off immediate concerns of a disorderly bankruptcy and stemming panic about global financial turmoil.
UBS has agreed to buy Credit Suisse in an emergency deal that ties up two of Europe’s largest banks, Swiss authorities announced Sunday.
Swiss authorities are planning to speed up the process by circumventing laws that would require a shareholder vote, the Financial Times reported earlier Sunday. The Financial Times also reported that the value of the all-share deal was more than $2 billion, but that figure was not officially confirmed by the Swiss authorities.
“Swift and stabilizing solution was absolutely necessary,” Alain Berset, president of the Swiss Confederation, said in a Sunday afternoon news conference. The UBS deal, he said, was “the best solution for restoring the confidence that has been lacking in financial markets recently.”
Credit Suisse and UBS did not immediately respond to requests for comment.
The takeover would cap more than a week of speculation over the Swiss giant’s fate amid growing fears of a global financial crisis, after two U.S. regional banks suddenly failed last week. Although U.S. regulators have taken sweeping steps, including backstopping deposits at Silicon Valley Bank and Signature Bank of New York, those measures have done little to assuage fears of a cascading banking crisis.
Those concerns went global this week, after Credit Suisse warned of “material weaknesses” in its financial reporting. On Thursday, the bank received $53.7 billion in emergency funds from Switzerland’s central bank, but it wasn’t enough to restore confidence in the bank’s viability. Shares of Credit Suisse have tumbled more than 20 percent in the past week, and more than 35 percent this year.
…More banks at high risk
Almost 200 US Banks Are at Risk of Silicon Valley Bank-Like Collapse: Study
Nearly 200 more banks could be vulnerable to the same type of risk that collapsed Silicon Valley Bank (SVB) earlier this month, according to a recently published study.
There are 186 banks across the United States that could collapse if half of their respective uninsured depositors withdraw their funds, researchers with the Social Science Research Network found. Deposits at member banks of up to $250,000 are insured by the Federal Deposit Insurance Corp., although the agency agreed to insure depositors’ funds far above that after SVB’s collapse this month.
“Combined, losses and uninsured leverage provide incentives for an SVB uninsured depositor run,” an abstract of the paper reads. “We compute similar incentives for the sample of all U.S. banks. Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to insured depositors, with potentially $300 billion of insured deposits at risk.
Die Sanktionen gegen Russland wirken 🙂