After intense negotiations, the first Swiss banking group UBS will buy for a pittance its rival in difficulties Credit Suisse, with important guarantees from the government which thus hopes to have escaped a major crisis and to regain the "confidence "investors from all over the world.
From the US Treasury to the European Central Bank (ECB), this takeover was immediately welcomed by those who feared a new runaway in the markets already made feverish by the recent bankruptcy of Silicon Valley Bank in the United States.
The amount of the takeover of Credit Suisse, which has been going through an intense phase of turbulence since the beginning of the week, amounts to 3 billion Swiss francs (3.02 billion euros), payable in UBS shares, for a bank which was worth almost triple Friday at the close of trading.
It creates a banking giant like Switzerland has never seen before and raises concerns about possible layoffs.
"It's the best way to ensure confidence," said the President of the Swiss Confederation, Alain Berset, to the media in Bern, announcing the agreement.
This solution "is not only decisive for Switzerland (...) but for the stability of the entire financial system" worldwide, underlined Mr. Berset in the presence of the presidents of the two banking giants, Colm Kelleher for UBS and Axel Lehmann for Credit Suisse.
The merger between the giants, both part of the tightly knit club of 30 too-big-to-fail banks, was announced in time for the opening of Asian markets in hopes of preventing widespread panic.
These woke up in mixed order, with Shanghai and Shenzhen posting a small rise of 0.85% and 0.14% respectively, Hong Kong and losing 0.85% and the flagship index Nikkei in Tokyo 0.18%.
The Hong Kong monetary authority on Monday described the impact of this saga on its banking system as "insignificant", specifying that the assets of Credit Suisse AG in Hong Kong represented only "less than 0.5% of the total assets of the system. bank" of the city.
Finance Minister Karin Keller-Sutter said the bankruptcy of Credit Suisse could have caused "irreparable economic damage". "For this reason, Switzerland must assume its responsibilities beyond its own borders."
ECB President Christine Lagarde said the takeover would "help restore orderly market conditions".
On the American side, the Treasury and the central bank said they were "satisfied".
For good measure, the most powerful central banks in the world, including the ECB and the Fed, immediately announced coordinated action to improve access to liquidity and reassure investors a little more.
The banking sector has been under stress since the major central banks have raised their rates sharply in an attempt to control inflation. Many establishments have failed to prepare after years of having access to cheap money.
The turbulence on the banks in the United States increased the anxiety of investors and pushed them to sell the securities of institutions considered to be weak links.
This is the case of Credit Suisse, which for 2 years has gone from high profile scandals to setbacks and suddenly found it difficult to access liquidity at reasonable prices.
A lifeline of 50 billion Swiss francs launched Wednesday by the Swiss Central Bank, after a black day on the stock market, gave only a brief respite to the bank.
The regulatory authorities and the federal government had to face immense pressure from Switzerland's main economic partners to rectify the situation.
UBS, which spent several years recovering from the shock of the 2008 financial crisis and a massive state bailout, is beginning to reap the rewards of its efforts and it took tremendous pressure from the authorities for management to the bank accepts to put on the habit of the saviour.
To ease the pill, the bank will benefit from a guarantee of some 9 billion francs from the government which serves as insurance if problems were to be discovered in very specific Credit Suisse portfolios.
The Central Bank is also granting a liquidity line of up to CHF 100 billion to the two institutions.
UBS will also take over the Swiss branch of Credit Suisse, one of the profitable parts of the group which lost 7.3 billion Swiss francs last year and still expected "substantial" losses in 2023.
This branch brings together retail banking and loans to SMEs.
"It's a great tool that we are very determined to keep" in order to "serve clients as effectively as Credit Suisse does," Kelleher said.
On Sunday, the union of bank employees in Switzerland "demanded" the participation of the social partners in the discussions, given the "enormous" stakes for employment. The employers gave their support to the action of the government but "expressly regrets that we have come to this".
20/03/2023 03:21:11 - Berne (AFP) - © 2023 AFP