Swiss banking giant UBS has agreed to rescue Credit Suisse in an emergency government-assisted takeover.
A report from the Financial Times stated the buyout was worth upwards of $2 billion.
This move comes as a desperate effort to prevent the potential collapse of Credit Suisse and to steer clear from further global market uncertainty, the Swiss authorities stated on Sunday, Reuters reported.
BREAKING: UBS has agreed to buy Credit Suisse in a historic, government-brokered deal aimed at containing a crisis of confidence that threatened to spread across global financial markets.
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— Bloomberg (@business) March 19, 2023
The Swiss Central Bank has assisted in the merger, putting sizable liquidity into the deal in an attempt to secure financial stability and protect the Swiss economy, Reuters reported.
Credit Suisse saw a significant drop in stock price last week in spite of being thrown a $54 billion financial lifeline by the Swiss National Bank on Wednesday. (RELATED: ‘Material Weaknesses’: Shares Of Credit Suisse Plunge To Near-Record Low)
The deal has been quickly criticized due to sudden legal changes introduced by the government that bypass UBS shareholder votes on the decision. Vincent Kaufmann, the CEO of Ethos Foundation which owns between 3-5% of Credit Suisse and UBS funds told the FT that this move was poor corporate governance.
“I can’t believe our members and UBS shareholders will be happy about this,” he said. “I have never seen such measures taken; it shows how bad the situation is.”
The merger comes after a recent abrupt collapse of American commercial bank SVB, which was placed into FDIC receivership March 10th.