Switzerland's biggest bank UBS has agreed to buy troubled rival Credit Suisse in a bid to stem the financial market turmoil sparked by the collapse of two US banks earlier this month.
UBS will pay 3 billion Swiss francs ($3.25 billion) for Credit Suisse, about 60% below the bank's valuation at market close on March 12. Most Credit Suisse shareholders will receive the equivalent of 0.76 Swiss francs ($0.82) per share, down from the 1.86 Swiss francs ($2.01) price on March 12.
Unusually, the deal will not require shareholder approval after the Swiss government agreed to change the law to remove any uncertainty about the deal. The combined bank will have $5 trillion in assets, according to UBS.
The deal between the two Swiss financial giants is the first mega-merger of systemically important global banks since the 2008 financial crisis.
UBS Chairman Colm Kelleher (right) shakes hands with Credit Suisse Chairman Axel Lehmann (left) after a press conference in Bern on March 19, 2023. Photo: CNBC
The Swiss government said it would provide more than $9 billion to cover some of the losses UBS may incur in its takeover of Credit Suisse. The Swiss National Bank also provided more than $100 billion in liquidity to UBS to help facilitate the deal.
UBS Chairman Colm Kelleher said UBS would shrink Credit Suisse's investment banking business and align it with UBS's "prudent risk culture".
Credit Suisse has been struggling with a series of losses and scandals for years. Customer confidence in the bank collapsed after it admitted “material weaknesses” in its accounting records, especially after the bankruptcy of Silicon Valley Bank and Signature Bank in the US.
After the 167-year-old bank's shares fell 25% over the past week, the Swiss National Bank provided an emergency loan of nearly $54 billion, but it was unable to save the situation .
Nguyen Tuyet (According to CNN, CNBC, WSJ)
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