Rollercoaster on the stock markets as financial sector reacts to £2.5bn Credit Suisse takeover
Stock markets around the world have plummeted following a takeover of Credit Suisse in a deal brokered by the Swiss government.
In one of the biggest interventions since the 2008 global financial crisis, UBS agreed on Sunday to buy its rival for $3.25bn (£2.5bn) in a bid to save Switzerland's second biggest lender.
While Swiss officials said the takeover was a commercial deal - not a bailout - regulators and central bankers were clearly worried enough about a global crisis to facilitate the deal and offer $100bn (£82bn) in backup funds.
Credit Suisse was bought out despite receiving a $54bn (£44bn) loan from Switzerland's central bank on Thursday.
The acquisition by Swiss banking giant UBS follows the collapse of Silicon Valley Bank in the United States, whose UK arm was bought out by HSBC.
Despite efforts to restore stability and confidence, stock markets in Europe and Asia fell sharply as the opened on Monday morning.
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The Hang Seng in Hong Kong fell 2.7%, while the UK's FTSE 100 fell by nearly 2% first thing in the morning, while European banking stocks fell significantly.
Credit Suisse shares fell by 60.5% in premarket trading, while UBS lost over 8%. Shares in Deutsche Bank also fell by more than 8% when the markets opened.
Despite this morning's turmoil, UK markets have already bounced back, with The FTSE 100 and some share indexes in Europe are in positive territory.
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In a bid to ease concerns about the UK's banking sector, the Bank of England said: “We welcome the comprehensive set of actions set out by the Swiss authorities today in order to support financial stability.
“We have been engaging closely with international counterparts throughout the preparations for today’s announcements and will continue to support their implementation. The UK banking system is well capitalised and funded, and remains safe and sound.”
UBS Group chairman Colm Kelleher earlier spoke of "enormous opportunities" through the takeover. He said the bank's long-term aim is to downsize Credit Suisse's investment banking business and align it with UBS' "conservative risk culture".
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Describing yesterday as a "historic, sad and very challenging" day, Credit Suisse chairman Axel Lehmann said: "Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome.
"This has been an extremely challenging time for Credit Suisse and while the team has worked tirelessly to address many significant legacy issues and execute on its new strategy, we are forced to reach a solution today that provides a durable outcome."
In a statement, the Swiss central bank and other officials described the deal as "a solution...to secure financial stability and protect the Swiss economy in this exceptional situation".