Eko Hot Blog reports that Troubled bank Credit Suisse has been rescued by its Swiss rival UBS in a government-backed deal.
Sunday evening’s announcement came after a weekend of emergency talks in Switzerland between the two banks and the country’s financial regulators.
The Swiss National Bank said the deal was the best way to restore the confidence of financial markets and to manage risks to the economy.
The Bank of England said it welcomed the “comprehensive set of actions”.
Credit Suisse shareholders were deprived of a vote on the deal and will receive one share in UBS for every 22.48 shares they own, valuing the bank at $3.15bn (£2.6bn).
At the close of business on Friday Credit Suisse was valued at around $8bn (£6.5bn).
But the deal has achieved what regulators set out to do – secure a result before the financial markets opened on Monday.
In a statement Switzerland’s central bank said “a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation”.
The federal government said in order to reduce any risks for UBS it would grant a guarantee against potential losses worth $9.6bn (£7.9bn)
The Swiss central bank has also offered liquidity assistance of up to $110bn (£90bn).
Global financial institutions were quick to praise the deal.
The Bank of England said it welcomed the “comprehensive set of actions” set out by the Swiss authorities.
“We have been engaging closely with international counterparts throughout the preparations for today’s announcements and will continue to support their implementation.”
It said the UK banking system was “well capitalised and funded, and remains safe and sound”.
The UK Treasury also said it welcomed the merger and the British government would continue to engage with the Financial Conduct Authority (FCA) and the Bank of England “as is usual”.
The FCA said on Sunday it was “minded to approve” the takeover to support financial stability as both UBS and Credit Suisse have operations in London.
“The FCA continues to engage closely with UK and international regulatory partners to monitor market developments,” the watchdog said.
Christine Lagarde, President of the European Central Bank, said she welcomed the “swift action” of the Swiss authorities.
“They are instrumental for restoring orderly market conditions and ensuring financial stability.”
“The euro area banking sector is resilient, with strong capital and liquidity positions,” Ms Lagarde said.
The comments from the European Central Bank President were echoed in the US.
Treasury Secretary Janet Yellen and Federal Reserve Board chairman Jerome Powell both said the announcement by the Swiss authorities supported “financial stability”.
“The capital and liquidity positions of the US banking system are strong, and the US financial system is resilient”, they said.
Source: BBC
Click to watch our video of the week:
The Oyo State chapter of the Supreme Council for Shari’ah in Nigeria (SCSN) has…
A Chief Magistrate Court in Iyaganku, Ibadan, has ordered the remand of three key figures…
As part of its annual tradition of appreciation, Nigeria’s leading online news platform, Eko Hot…