Deal closed: UBS buys Credit Suisse
📌On Sunday night the 2 largest Swiss banks reached an agreement in which UBS will acquire Credit Suisse for 3 billion Swiss francs. Credit Suisse was unable to withstand the continued capital outflows following the failure of Silicon Valley Bank, and despite being offered a CHF 50 billion credit line by the SNB, few had confidence in the bank’s ability to survive in the coming months.
📌Although it was the failure of SVB that sparked the chaos among banks with higher exposure to risk, investor confidence in Credit Suisse was lost several months ago, when it had to undertake a capital increase last year to stem the continuing flight of deposits. This loss of confidence is due to poor risk management (Archegos and Greensill), several internal scandals, judicial investigations…
📌The purchase of UBS is endorsed by the Swiss regulator, which has also allowed it to have guarantees from the SNB for 9 billion francs to reduce the risk of the operation and a liquidity line of 100 billion Swiss francs.
📌The purchase has been well received by the market, and although the banking sector suffered a correction after Monday’s opening, it has rallied strongly throughout the day. However, the takeover has been controversial, as one of the clauses of the purchase allowed the CoCos to absorb losses ahead of the shares.
Source: Financial Times