HomeBusinessTwo Swiss banking giants combine to quell growing global bank crisis

Two Swiss banking giants combine to quell growing global bank crisis


Credit Suisse, the battered Swiss banking giant, has agreed to a takeover by Switzerland’s largest bank, UBS — a move aimed at staving off immediate concerns of a disorderly bankruptcy and stemming panic about global financial turmoil.

UBS has agreed to buy Credit Suisse in an emergency deal that ties up two of Europe’s largest banks, Swiss authorities announced Sunday.

Swiss authorities are planning to speed up the process by circumventing laws that would require a shareholder vote, the Financial Times reported earlier Sunday. The Financial Times also reported that the value of the all-share deal was more than $2 billion, but that figure was not officially confirmed by the Swiss authorities.

A “swift and stabilizing solution was absolutely necessary,” Alain Berset, president of the Swiss Confederation, said in a Sunday afternoon news conference. The UBS deal, he said, was “the best solution for restoring the confidence that has been lacking in financial markets recently.”

In a joint statement Sunday afternoon, Treasury Secretary Janet L. Yellen and Federal Reserve Chair Jerome H. Powell said that they “welcome” the announcement.

“The capital and liquidity positions of the U.S. banking system are strong, and the U.S. financial system is resilient,” Yellen and Powell wrote. “We have been in close contact with our international counterparts to support their implementation.”

Credit Suisse and UBS did not immediately respond to requests for comment.

The takeover caps more than a week of speculation over the Swiss giant’s fate amid growing fears of a global financial crisis, after two U.S. regional banks suddenly failed earlier this month. Although U.S. regulators have taken sweeping steps, including backstopping deposits at Silicon Valley Bank and Signature Bank of New York, those measures have done little to assuage fears of a cascading banking crisis.

Those concerns went global this week, after Credit Suisse warned of “material weaknesses” in its financial reporting. On Thursday, the bank received $53.7 billion in emergency funds from Switzerland’s central bank, but it wasn’t enough to restore confidence in the bank’s viability. Shares of Credit Suisse have tumbled more than 20 percent in the past week, and more than 35 percent this year.

The past week has raised new questions on what it will take to avert another crisis. On Sunday, Sen. Elizabeth Warren (D-Mass.) called on Congress to lift the federal insurance cap for bank deposits above $250,000. She also urged lawmakers to repeal a provision of the 2018 law that had loosened restrictions on banks with $50 billion or more in assets, saying the latest tumult in the financial system underscored her belief that the Fed has fallen short on its core duties.

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