UBS, Switzerland’s largest bank, has agreed to buy rival Credit Suisse for more than $2 billion in an emergency deal to avoid turmoil stemming from the current banking crisis.
The Swiss National Bank announced the deal on Sunday, saying that it would “secure financial stability and protect the Swiss economy,” following worldwide market panic after the fall of America’s Silicon Valley Bank and Signature Bank.
Shares for Credit Suisse fell by 25% last week, stirring a bank rush by customers that resulted in withdrawal totals of $10 billion a day, the Financial Times reported.
In order to prevent a full blown meltdown come Monday, Swiss officials agreed to expedite the UBS takeover, offering a $100 billion liquidity line to Credit Suisse as part of the deal.
The agreement comes just a day after a meeting between UBS and the Swiss National Bank, where the company initially offered $1 billion for the takeover. Now, UBS will pay about 54 cents a share of its own stock to secure the deal.
UBS and Credit Suisse are among the 30 top banks in the world and hold about $1.7 trillion in assets together, with their company headquarters both based in Zurich.
Credit Suisse was the one on better footing 15 years ago during the 2008 financial crisis, with UBS being the bank that needed government assistance then.
But Credit Suisse has seen its shares fall by 84% over the past two years, with UBS instead seeing its stock soar by 15%.
As Switzerland’s second biggest bank, Credit Suisse employed more than 50,000 people at the end of 2022.
The bank saw 30% of its share price plunge overnight on Wednesday following market scares over the SVB and Signature Bank collapses, with the Swiss National Bank offering a $54 billion lifeline that was unable to save the bank.
Along with the merger of the Swiss banking giants, S&P Global Inc. is expected to downgrade First Republic Bank, again, less than a week after its initial ratings cut.
Sources told Bloomberg the ratings firm will announce the downgrade from BB+ to only B+ this week, just days after demoting it from A-, due to the impacts of the current banking crisis.
“Following Thursday’s uninsured deposit of $30 billion by the 11 largest banks in the country, together with cash on hand, First Republic Bank is well positioned to manage short-term deposit activity,” the bank said in a statement. “This support reflects confidence in First Republic and its ability to continue to provide unwavering exceptional service to its clients and communities.”
S&P did not respond to The Post’s request for comment Sunday.