UBS, one of the world’s leading financial companies, will buy Switzerland’s troubled bank Credit Suisse for about $3.25 billion in an effort to prevent turmoil in the global banking system. Following the announcement, Credit Suisse shares plunged 63 per cent and UBS plunged 14 per cent.
Credit Suisse said on Thursday that it would take a loan of up to $54 billion from the Swiss Central Bank (central bank) after its shares fell. However, even this did not reassure the bank’s customers and investors. Subsequently, the Swiss authorities requested UBS to take over the troubled bank.
Swiss President Alain Barset said the deal was a major step forward for the stability of the international financial sector. “An uncontrolled collapse of Credit Suisse would have caused huge problems for the country and the international financial system,” he said.
Switzerland’s seven-member governing body has issued an emergency ordinance allowing bank mergers without shareholders’ approval. Credit Suisse Chairman XL Lehman described the deal as a game changer.
UBS chairman Kom Kelleher said the acquisition would open up immense opportunities. Company officials said they plan to sell Credit Suisse in parts or downsize the bank.
