1 year ago
67 The logos of Swiss banks Credit Suisse and UBS connected March 16, 2023 successful Zurich, Switzerland.
Arnd Wiegmann | Getty Images News | Getty Images
Shares of Credit Suisse collapsed 62% connected Monday morning, portion UBS dropped astir 14% aft the second secured a 3 cardinal Swiss franc ($3.2 billion) "emergency rescue" of its embattled home rival.
Swiss authorities and regulators helped to facilitate the deal, announced Sunday, successful an effort to stem the hazard of contagion to the planetary banking strategy arsenic Credit Suisse teetered connected the brink.
The size of Credit Suisse was a interest for the banking system, arsenic was its planetary footprint fixed its aggregate planetary subsidiaries. The 167-year-old bank's equilibrium expanse is astir doubly the size of Lehman Brothers' erstwhile it collapsed, astatine astir 530 cardinal Swiss francs astatine the extremity of past year.
The combined slope volition beryllium a monolithic lender, with much than $5 trillion successful full invested assets and "sustainable worth opportunities," UBS said successful a merchandise precocious connected Sunday.
The bank's Chairman Colm Kelleher said the acquisition was "attractive" for UBS shareholders but clarified that "as acold arsenic Credit Suisse is concerned, this is an exigency rescue."
"We person structured a transaction which volition sphere the worth near successful the concern portion limiting our downside exposure," helium added successful a statement. "Acquiring Credit Suisse's capabilities successful wealth, plus absorption and Swiss cosmopolitan banking volition augment UBS's strategy of increasing its capital-light businesses."
Neil Shearing, radical main economist astatine Capital Economics, said a implicit takeover of Credit Suisse whitethorn person been the champion mode to extremity doubts astir its viability arsenic a business, but the "devil volition beryllium successful the details" of the UBS buyout agreement.
"One contented is that the reported terms of $3,25bn (CHF0.5 per share) equates to ~4% of publication value, and astir 10% of Credit Suisse's marketplace worth astatine the commencement of the year," helium highlighted successful a enactment Monday.
"This suggests that a important portion of Credit Suisse's $570bn assets whitethorn beryllium either impaired oregon perceived arsenic being astatine hazard of becoming impaired. This could acceptable successful bid renewed jitters astir the wellness of banks."
— CNBC's Sam Meredith contributed to this report
