UBS to take over beleaguered rival Credit Suisse to prevent Swiss banking giant collapsing
19 March 2023, 20:09 | Updated: 20 March 2023, 00:27
UBS will take over crisis-hit rival Credit Suisse in a government-backed emergency rescue deal aimed at securing financial stability, the Swiss central bank has said.
Beleaguered lender Credit Suisse found itself on the verge of financial calamity last week, despite receiving a $54bn (£44bn) loan from Switzerland's central bank.
but the move failed to reassure markets and its shares tumbled 24 percent, sparking a wider sell-off on European markets, and prompted a request from the Swiss government for UBS to consider taking the bank over.
It's believed both banks will be handed a liquidity assistance loan of up to $110bn.
UBS Group chairman Colm Kelleher said the deal "represents enormous opportunities", adding that UBS's long-term aim would be to downsize Credit Suisse's investment banking business.
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Credit Suisse chairman Axel Lehmann said it was an "historic, sad and very challenging" day for both his bank and the global market.
"Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome," he said.
"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."
Swiss central bank and other officials said in a statement that the deal represented "a solution...to secure financial stability and protect the Swiss economy in this exceptional situation".
It comes after the bank suffered losses last week following the failure of two American banks over the past two weeks.
Credit Suisse is loss-making and in recent years has faced a string of problems.
The bank is among a small group of "systematically important" financial companies seen as too big to fail, meaning the agreement is likely to send a ripple through global markets on Monday.
