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UBS agrees to buy Credit Suisse for $2 billion



Switzerland’s largest bank UBS agreed on Sunday to buy rival Credit Suisse for $2 billion after pressure from authorities, according to the Financial Times.

The figure is double the initial offer this Sunday, in a move that wants to avoid the collapse of the entity and panic in the market on Monday.

UBS agreed to double the originally proposed amount to overcome the reluctance of Credit Suisse and one of its major shareholders, according to the financial daily.

Assuming that this operation is only for UBS shares and that the price per share of Credit Suisse shares is 0.5 CHF, it doubles the originally proposed 0.25 CHF, but still ends Friday. Well below the listed 1.86 francs.

The operation is being considered by the Swiss federal government in Bern, with emergency meetings already held on Thursday and Saturday.

According to CH Media, the government will notify officials this Sunday and hold a press conference to reveal details of the operation.

The merger of two giant banks, part of a group of 30 banks considered important in the global financial system, should be completed and announced in time for the opening of Asian markets.

We hope this announcement is enough to prevent general panic.

bank under stress

The banking sector has been under strain since major central banks sharply raised interest rates in an attempt to curb inflation.

Many financial institutions have failed to prepare after years of access to cheap funds.

The failure of Silicon Valley Bank and other regional banks in the United States has increased investor anxiety and created crises for other institutions that were considered weak.

This is the case of Credit Suisse, which has been embroiled in various scandals for two years and announced a three-year restructuring plan despite the efforts of its management.

On Wednesday, the Swiss central bank announced a 50 billion Swiss franc ($54 billion) bailout package after the stock market storm, but the move only gave banks temporary reprieve.

Under immense pressure from Switzerland’s main economic partners, regulators and the federal government acted to clean up the situation before it spread to the rest of the world.

Bank customers withdrew $10.8 billion in a single day late last week, according to the Financial Times and Blick.


UBS is asking the government to cover legal costs and potential losses, which could amount to billions of francs, according to Bloomberg.

After years of recovering from the 2008 financial crisis and massive state bailouts, UBS is beginning to pay off in its efforts.

As such, it took a great deal of effort on the part of the authorities before the bank’s management agreed to act as a savior for Credit Suisse.

On Sunday, the Swiss bankers’ union “demanded” the participation of the social partners in discussions, given the “huge” stakes in the takeover, which would mean massive job losses.

Source: Diario.Elmundo

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