Swiss leaders are holding a news conference on Sunday night after multiple media reports that banking giant UBS is believed to be in talks to acquire its smaller rival Credit Suisse in an effort to avoid market turmoil in global banking. Is.
The Federal Council, the seven-member governing body that includes Swiss President Alain Berset, is expected to announce that UBS is acquiring Credit Suisse in a possible deal brokered by the Swiss government.
Credit Suisse has been designated by the Financial Stability Board, an international body that oversees the global financial system, as one of the world’s most important globally organized banks. This means that regulators believe that its uncontrolled failure will create ripples throughout the financial system, unlike the collapse of Lehman Brothers 15 years ago.
After the collapse of Sunday’s news conference two big american banks what inspired last week a frantic, widespread reaction From US government To prevent another bank panic. Nevertheless, global financial markets are on the upswing since Credit Suisse’s share price began to decline this week.
167-year-old Credit Suisse already 50 billion dollars received (54 million Swiss francs) loan from the Swiss National Bank, which led to a brief rise in the bank’s share price. According to news reports, however, this move did not appear to be sufficient to stem the outflow of deposits.
Still, many of Credit Suisse problems are unique And don’t overlap with the weaknesses that brought down Silicon Valley Bank and Signature Bank, whose failures a critical rescue effort by the Federal Deposit Insurance Corporation and federal Reserve, As a result, their collapse does not necessarily signal the start of the 2008 financial crisis.
The deal caps a highly volatile week for Credit Suisse, especially on wednesdays Its shares fell to a record low after its biggest investor, the Saudi National Bank, said it would not invest any more money in the bank to avoid tripping rules, which would have increased its stake by about 10%. Will kick
Shares closed down 8% at 1.86 francs ($2) on the Swiss exchange on Friday. The stock has seen a long decline: it traded at over 80 francs in 2007.
Its current troubles began after Credit Suisse reported on Tuesday that managers had identified “material weaknesses” in the bank’s internal controls over financial reporting as late as last year. This raised fears that Credit Suisse would be the next domino to fall.
Despite being smaller than its Swiss rival UBS, Credit Suisse still wields considerable influence with $1.4 trillion in assets under management. The firm has significant trading desks around the world, caters to the wealthy and wealthy through its wealth management business, and is a leading advisor to global companies in mergers and acquisitions. Notably, Credit Suisse did not require government support during the financial crisis in 2008, while UBS did.
Despite the banking turmoil, the European Central Bank approved a big, half-a-percentage-point increase on Thursday interest rates to try to curb extremely high inflation, saying Europe’s banking sector remains “resilient” with strong finances.
ECB President Christine Lagarde said banks are “in a completely different position than in 2008” during the financial crisis, partly due to tighter government regulation.
Swiss bank is insisting on raising money from investors and is preparing a new strategy to overcome many problems. Bad bet on hedge fundsRepeated shake-up of its top management and a espionage case involving UBS.