The takeover would be the most significant banking bailout since the financial crisis of 2008
Investment banking company UBS has agreed to purchase its rival Credit Suisse in a deal worth more than $3 billion after the Swiss government mediated the merger between the country’s two largest banks to avoid chaos in the financial markets before March 20.
The announcement came after government officials had been scrambling for several days to figure out how to save the troubled lender Credit Suisse, a 167-year-old banking giant.
Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares owned, or CHF0.76 per share, for a total value of CHF3 billion ($3.24 billion), according to a press release by UBS. The offer price is nearly 60 percent less than Credit Suisse’s March 17 closing price of CHF1.86.
“With the takeover of Credit Suisse by UBS, a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation,” Swiss National Bank (SNB) said in a statement.
Both institutions will have “unrestricted access” to the central bank’s existing facilities.
As part of the agreement, the central bank has committed to providing both institutions liquidity assistance up to CHF100 billion “with privileged creditor status in bankruptcy,” according to the statement.
“On Friday, the liquidity outflows and market volatility showed that it was no longer possible to restore the necessary confidence and that the swift and stabilizing solution was absolutely necessary,” Swiss President Alain Berset announced during a press conference late on March 19.
“The takeover of Credit Suisse by UBS is the best solution for restoring the confidence that has been lacking in financial markets recently and for best managing the risk to our country and its citizens.”
The move comes after a turbulent year for the bank, which has been hit with a number of scandals, including questions about its business practices or lack of due diligence after leaked documents allegedly identified more than 18,000 accounts belonging to foreign customers, including criminals, dictators, and sanctioned political actors who stashed their money at the Switzerland-based bank.
By Emel Akan
