UBS to buy sinking Credit Suisse bank: deal finalized for $3.2 billion
UBS to buy sinking Credit Suisse bank: deal finalized for $3.2 billion, Swiss government giving guarantee cover to UBS
Switzerland's largest bank UBS Group AG has announced the purchase of troubled Credit Suisse bank. According to reports, the country's second-largest private lender UBS will buy Credit Suisse for $3.2 billion amid the banking crisis.
Swiss regulator Swiss National Bank (SNB) played a key role in the deal between UBS and Credit Suisse Bank. The government of Switzerland is also supporting UBS in this deal. The Swiss government is also giving a guarantee cover of 9 billion francs i.e. $9.7 billion (Rs 80 thousand crores) to UBS for the risks involved in the acquisition of Credit Suisse.
For this deal between UBS and Credit Suisse Bank, the need for the permission of the stakeholders has also been abolished. To support UBS in buying Credit Suisse Bank, the Swiss National Bank will also give a loan of 100 billion Swiss francs i.e. $ 108 billion (Rs 8.91 lakh crore).
Under this 'all share transaction' deal, Credit Suisse's stakeholders will be given 1 share of UBS for every 22.48 shares held. The deal is being done for around 3 billion Swiss francs. It has been told in the report that this deal will be at the closing price of Credit Suisse shares in the market closed on March 17. Shares of Credit Suisse had closed at 1.86 Swiss francs on the last trading session i.e. Friday.
If seen, this deal has been done at a very low price, but technically it is not a deal but a rescue plan. In a press conference, Swiss Finance Minister Karin Keller-Sutter said the deal was a commercial solution, not a bailout.
UBS Chairman Colm Kehler said the deal was essential to save Switzerland's financial framework. It is equally important to save the global financial structure. UBS had no option but to back out. To avoid the permissions of the stakeholders, the Swiss government has used the Emergency Ordinance.
Credit Suisse has said in a statement that the deal is expected to be completed by the end of this year. According to UBS, the combined bank that will be formed after the merger of the two banks will have an asset value of $5 trillion.