Swiss banking giant UBS has bought the struggling Credit Suisse bank for 3 billion Swiss francs ($3.24 billion).
The deal was approved by the Swiss government, which provided guarantees to the country’s regulator to provide liquidity to Credit Suisse.
“The Federal Council supports the acquisition of Credit Suisse by UBS. In order to strengthen the stability of the financial markets prior to the acquisition, the Swiss Confederation is providing a guarantee to the Swiss National Bank to provide Credit Suisse with additional liquidity assistance,” the government said.
The government also provided the bank with CHF 9 billion to mitigate the risks associated with the acquisition.
Credit Suisse has become the latest and most important victim of the crisis of confidence, which has already led to the bankruptcy of two medium-sized US banks and the emergency damage to the industry of another. In addition, Switzerland’s second largest lender was considered one of the 30 largest banks in the world, so the Swiss authorities hastily implemented this takeover.
The main factor in the crisis was the sharp rise in global interest rates, which hit the value of even safe investments, where banks keep part of their money. This scared investors and sent the share prices of all banks plummeting, with those considered the weakest suffering the most.
Financial authorities in the EU, the US and the UK have said they support the deal, emphasizing that banks are strong and people’s savings and deposits are safe.
UBS and Credit Suisse are systemically important banks in Switzerland. Both have more than 150 years of history: UBS was founded in 1862 and Credit Suisse in 1856.