UBS is paying 3 billion francs ($3.3 billion) for its rival in an all-share deal that includes extensive government guarantees and liquidity provisions. The price per share marked a 99 per cent decline from Credit Suisse’s peak in 2007.
New Delhi: Swiss-based multinational investment bank UBS Group AG has agreed to take over its crisis-hit banking rival Credit Suisse for $3.2 billion. The government-brokered deal was negotiated in hurry over the weekend before the Asian markets opens.
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KEY THINGS TO KNOW ABOUT UBS-CREDIT SUISSE DEAL
- UBS is paying 3 billion francs ($3.3 billion) for its rival in an all-share deal that includes extensive government guarantees and liquidity provisions. The price per share marked a 99 per cent decline from Credit Suisse’s peak in 2007.
- The Winner: Ralph Hamers-led UBS has emerged as the winner in the deal as the bank’s wealth and asset management invested assets have soared to about $5 trillion and got a special waiver to keep Credit Suisse’s profitable Swiss unit that many analysts said was worth more than triple what UBS paid for the whole firm.
- Credit Suisse will lose nearly 16 billion francs ($17.3 billion) of its bonds as this deal has triggered an agreement with European bank regulators that is designed to wipe out the bonds if a bank’s capital falls below a certain level. Read More: Petrol and Diesel Rate Today, 20 March: Fuel prices unchanged; Check rates in Delhi, Mumbai, other cities
- UBS had sought aa $6 billion guarantee from the Swiss government to cover the risks involved in the takeover of Credit Suisse, as per a Reuters report quoting sources.
- One of the sources mentioned in the Reuters report added that the combination of two banks, Credit Suisse and UBS, will lead to the layoff of nearly 10,000 employees.
- Credit Suisse, the 167-year-old banking giant, is the biggest name that has yet emerged in the turmoil unleashed by the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week. Authorities have been forced to take extraordinary measures to keep banks afloat as the collapse of these banking majors has spurred a rout in banking stocks.
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