UBS is going to purchase the struggling Credit Suisse
Swiss officials orchestrated a last-minute emergency acquisition of Credit Suisse by fellow banking behemoth UBS with the precision of one of the country’s famous timepieces.
Swiss President Alain Berset stated in a news conference on Sunday that Credit Suisse had been destabilised by the recent banking industry instability and that this purchase was crucial to stabilising the bank and the global banking system.
UBS Group AG, in a stock deal valued at more than $3 billion, will acquire Credit Suisse. As part of the agreement, the Swiss National Bank will provide UBS with an additional $100 billion.
The consolidation of UBS and Credit Suisse is the most recent explosion in the continuing financial woes that began with the failure of Silicon Valley Bank.
It has been speculated that the long-struggling Credit Suisse may go bankrupt if extraordinary steps are not taken to stem the outflow of billions of dollars from the bank by panicked investors and anxious depositors in recent days. Credit Suisse was thrown a $54 billion lifeline by the Swiss National Bank, but it was not enough to save the bank.
Because Credit Suisse is a “global systemically significant bank,” this is a particularly shocking development after more than a week of turbulence and worry in the financial sector. As a result, the collapse of Credit Suisse might have far-reaching consequences for the international economy.
Crisis at Credit Suisse to a head last week after the firm disclosed “material deficiencies” in its financial reporting.
Yet the financial and political crises that damaged the bank’s reputation and bottom line began long before it. The shares of the bank has dropped by almost 80% in only the past two years.
Credit Suisse was established 166 years ago to provide financial support for the Swiss railroad system. It rose to prominence as one of the world’s largest banks and gained recognition across the globe.
A money laundering operation involving a Bulgarian cocaine trafficking ring and the hiring of investigators to spy on an executive who defected to a competing bank have dealt serious blows to the bank’s reputation in recent years.