In a historic agreement facilitated by the government, UBS Group AG agreed to acquire Credit Suisse Group AG in order to stem the prospect of a confidence crisis spreading to other international financial markets.
According to moneyweb.co.za, the Swiss bank is paying more than $2 billion for its competitor. It will be an all-share transaction with a price that is considerably lower than Credit Suisse’s Friday closing price, which put the bank’s value at around 7.4 billion Swiss francs ($8 billion).
The two largest political parties in Switzerland harshly attacked UBS’s acquisition of Credit Suisse, claiming that the multi-billion dollar public support for the transaction constituted significant risks for the nation.
Authorities in Switzerland revealed on Sunday that UBS had agreed to acquire rival Swiss bank Credit Suisse in a shotgun merger intended to stop a confidence crisis that was spreading throughout the global banking industry.
The enormous sums of money provided through the central bank’s liquidity injection and government help sparked concerns from parties across the political spectrum.
Regulators in Asia issued reassuring statements Monday that their banking systems remained robust and stable after Swiss banking giant UBS agreed to buy its rival Credit Suisse for $3.25 billion.
The UK banking sector “remains safe and adequately funded” following the last-minute rescue of Credit Suisse, according to a spokeswoman for the prime minister.
Following a day and night effort by authorities to reach a deal, the bank was acquired by competitor UBS on Sunday. This, together with the recent failure of two smaller US banks, has raised concerns about the stability of the global financial system.
On Monday, investors’ concerns about a broader financial crisis contributed to the erratic share prices of European banks. Moneyweb/CNN