UBS agrees to buy Credit Suisse as regulators look to shore up the global banking system

UBS agreed to bargain its embattled rival Credit Suisse with Swiss regulators playing a cardinal portion successful the woody arsenic governments looked to stem a contagion that threatening the planetary banking system.

"With the takeover of Credit Suisse by UBS, a solution has been recovered to unafraid fiscal stableness and support the Swiss system successful this exceptional situation," work a connection from the Swiss National Bank, which pledged a indebtedness of up to 100 cardinal ($108 billion) Swiss francs to enactment the combination.

The takeover of the country's 2 largest banks was facilitated by the Swiss government, the Swiss Financial Market Supervisory Authority FINMA and the Swiss National Bank, the connection said. No magnitude was fixed successful the archetypal statement.

The UBS woody was rushed unneurotic earlier markets reopened for trading Monday aft Credit Suisse shares logged their worst play diminution since the onset of the coronavirus pandemic. The losses came contempt a caller a indebtedness of up to 50 cardinal Swiss francs ($54 billion) granted from the Swiss cardinal slope to halt the descent and reconstruct assurance of the bank's counterparties successful the fiscal markets.

Credit Suisse had already been battling a string of losses and scandals, and the past 2 weeks sentiment was rocked again arsenic banks successful the U.S. reeled from the illness of Silicon Valley Bank and Signature Bank. U.S. regulators' backstop of uninsured deposits successful the failed banks and the instauration of a caller backing installation for troubled different fiscal institutions failed to stem the daze and is threatening to envelop much banks some successful the U.S. and abroad.

Despite regulators' engagement successful the pairing, the woody gives UBS autonomy to tally the acquired assets arsenic it sees fit, which could mean important occupation cuts, sources told CNBC's David Faber.

Credit Suisse's standard and imaginable interaction connected the planetary system is overmuch greater than U.S. determination banks, which pressured Swiss regulators to find a mode to bring the country's 2 largest fiscal institutions together. Credit Suisse's equilibrium expanse is astir doubly the size of Lehman Brothers erstwhile it collapsed, astatine astir 530 cardinal Swiss francs arsenic of the extremity of 2022. It is besides acold much globally interconnected, with aggregate planetary subsidiaries — making an orderly absorption of Credit Suisse's concern adjacent much important.

Bringing the 2 rivals unneurotic was not without its struggles, but unit to stave disconnected a systemic situation won retired successful the end. UBS initially offered to bargain Credit Suisse for astir $1 cardinal Sunday, according to aggregate media reports. Credit Suisse reportedly balked astatine the offer, arguing it was excessively debased and would wounded shareholders and employees, people with cognition of the substance told Bloomberg. 

By Sunday afternoon, UBS was successful talks to bargain the slope for "substantially" much than 1 cardinal Swiss francs, sources told CNBC's Faber. He said the terms of the woody accrued passim the day's negotiations. 

Credit Suisse mislaid astir 38% of its deposits successful the 4th fourth of 2022 and revealed successful its delayed yearly study aboriginal past week that outflows person inactive yet to reverse. It reported a full-year nett nonaccomplishment of 7.3 cardinal Swiss francs for 2022 and expects a further "substantial" nonaccomplishment successful 2023.

The slope had antecedently announced a monolithic strategical overhaul successful a bid to code these chronic issues, with current CEO and Credit Suisse seasoned Ulrich Koerner taking implicit successful July.

—CNBC's Katrina Bishop contributed to this report.