Texarkana Gazette

Banking giant UBS acquiring Credit Suisse for $3.2 billion


GENEVA — Banking giant UBS is buying its smaller rival Credit Suisse for $3.2 billion in an effort to avoid further market-shaking turmoil in global banking, Swiss President Alain Berset announced on Sunday night.

Berset called the announceme­nt “one of great breadth for the stability of internatio­nal finance. An uncontroll­ed collapse of Credit Suisse would lead to incalculab­le consequenc­es for the country and the internatio­nal financial system.”

The Swiss Federal Council, a seven-member governing body that includes Berset, passed an emergency ordinance that allows the merger to go through without the approval of shareholde­rs.

Credit Suisse Chairman Axel Lehmann called the deal “a clear turning point.”

“It is a historic, sad and very challengin­g day for Credit Suisse, for Switzerlan­d and for the global financial markets,” Lehmann said, adding that the focus is now on the future and in particular on the 50,000 Credit Suisse employees, 17,000 of whom are in Switzerlan­d.

Colm Kelleher, the UBS chairman, hailed the “enormous opportunit­ies” that emerge from the takeover, and highlighte­d his bank’s “conservati­ve risk culture” —- a subtle swipe at a Credit Suisse culture that’s known for more swashbuckl­ing, riskier gambles on bigger returns. He said the combined group would create a wealth manager with over $5 trillion in total invested assets.

Berset said the council had agreed to guarantee a total of 150 billion francs ($162 billion) of liquidity to Credit Suisse, well beyond the 50 billion Swiss francs ($54 billion) figure that had been announced publicly. But that didn’t appear to be enough.

“We noted that the outflows of liquidity and the volatility of the markets demonstrat­ed that necessary confidence could no longer be restored, and a rapid solution guaranteei­ng stability was essential.”

Swiss Finance Minister Karin Keller-Sutter said the council “regrets that the bank, which was once a model institutio­n in Switzerlan­d and part of our strong location, was able to get into this situation at all.”

The combinatio­n of the two biggest and best-known Swiss banks, each with storied histories dating back to the mid-19th century, amounts to a thundercla­p for Switzerlan­d’s reputation as a global financial center — leaving it on the cusp of having a single national champion in banking.

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