Central Banks Unite To Calm Markets After UBS Deal To Buy Credit Suisse

Amidst the surging banking crisis worldwide, some of the largest central banks came together on Sunday to stop the spreading difficulties. The banks cooperation came following Swiss authorities’ persuasion on UBS Group AG to buy rival Credit Suisse Group AG in a historic deal.

According to reports, UBS will pay three billion Swiss francs (USD 3.23 billion) for 167-year-old Credit Suisse, assuming up to USD 5.4 billion in losses. This is a deal backed by a massive Swiss guarantee in an expected closure by the end of 2023.

The announcement caused the US Federal Reserve, European Central Bank and other major central banks to issue statements reassuring markets wallops by a banking crisis that started with the collapse of two regional banks from the US earlier this month.

The report predicts S&P 500 and Nasdaq futures up 0.4 per cent respectively, both giving back some earlier gains. While Australian shares opened with a 0.5 per cent loss, New Zealand dipped at the open. Correspondingly, the safe-haven dollar lost ground against the Sterling and the Euro but was up in comparison to the Yen.

Commenting on the matter UBS Chair Colm Kelleher said, "it’s a historic day in Switzerland we never hoped for. I would like to highlight that while we did not initiate discussions, we believe this transaction is a financial attraction for all UBS shareholders." 

Subsequently, UBS CEO Ralph Hamers underlined that there are many details, still required to be worked through. He said, there are still some questions to be answered, "I understand the same and apologise for it."

Meanwhile, Fed Chair Jerome Powell and US Treasury Secretary Janet Yellen welcomed the announcement by the Swiss authorities. The Bank of England was also in support of the Swiss.