(MENAFN) UBS Group and Credit Suisse Group, two of the largest European banks, have agreed to merge in a deal brokered by the Swiss government. The aim of the deal is to restore public confidence in the Western financial system and prevent a global crisis. Under the deal, UBS will pay 3 billion Swiss francs ($3.24 billion) in stock to acquire Credit Suisse. The takeover will be supported by government guarantees and 100 billion francs in liquidity assistance from Switzerland’s central bank.
The agreed price of 1 UBS share for each 22.48 shares of Credit Suisse values the latter bank at less than half its market closing price on Friday. As part of the deal, UBS will absorb up to $5.4 billion in losses at Credit Suisse. The European Central Bank President Christine Lagarde welcomed the merger, stating that the swift action and decisions taken by the Swiss authorities are instrumental for restoring orderly market conditions and ensuring financial stability.
While the banking sector in the region is resilient, Lagarde added that the policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy. The merger of UBS and Credit Suisse will create a stronger and more stable banking system in Switzerland and will have a positive impact on the wider European banking sector.
In conclusion, the UBS-Credit Suisse merger is a significant development in the European banking sector, as it will help to restore public confidence in the Western financial system and prevent a global crisis. The Swiss government has played a crucial role in brokering the deal, which will be supported by government guarantees and liquidity assistance from Switzerland’s central bank. The merger will create a stronger and more stable banking system in Switzerland and will have a positive impact on the wider European banking sector.
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