March 31, 2023 | Financials | Europe | Ended

Credit Suisse Group / UBS Group: Deal Insights

On 19-Mar-23, UBS agreed to buy and restructure its stricken smaller Swiss rival, Credit Suisse, for $3.2bn (CHF 3bn), after the country’s financial authorities intervened to ensure financial stability. Prior to the merger announcement, the embattled bank's share price had declined 75.1% in the space of 12 months, and “given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome,” Axel Lehmann, chairman of Credit Suisse, said. The Swiss Federal Department of Finance, the Swiss National Bank (SNB) and the Swiss Financial Market Supervisory Authority (FINMA) said they told Credit Suisse and UBS to enter into a merger agreement to “ensure stability for the bank’s customers and for the financial center.” Switzerland's central bank said it will grant liquidity lines to the banks of up to CHF 100bn, backed by a default guarantee, under the deal, while the Swiss government will provide more than $9bn to cover potential losses that UBS might incur due to the merger. The emergency ordinance, enacted by the Swiss Federal Council, was designed to ensure the liquidity of Credit Suisse until the takeover completes. Additionally, FINMA informed Credit Suisse that its additional Tier 1 capital of CHF 16bn will be completely written off. Within hours of the announcement, global central bankers, including the US Federal Reserve and the SNB announced an expanded dollar swap line, an international lending operation to provide “an important liquidity backstop to ease strains in global funding markets.” ...

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