The Day

UBS to buy Credit Suisse for $3B

Merger rushed to ward off further bank turmoil


— Banking giant UBS is buying troubled rival Credit Suisse for almost $3.25 billion, in a deal orchestrat­ed by regulators in an effort to avoid further market-shaking turmoil in the global banking system.

Swiss authoritie­s pushed for UBS to take over its smaller rival after a plan for Credit Suisse to borrow up to $54 billion failed to reassure investors and the bank’s customers.

Shares of Credit Suisse and other banks sold off last week after the failure of two banks in the U.S. sparked concerns about other potentiall­y shaky institutio­ns in the global financial system.

Credit Suisse is among the 30 financial institutio­ns known as globally systemical­ly important banks, and authoritie­s worried about the fallout if it were to fail.

The deal was “one of great breadth for the stability of internatio­nal finance,” said Swiss President Alain Berset as he announced the deal Sunday night. “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 allowing 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, aggressive gambles on bigger returns. He said the combined group would create a wealth manager with over $5 trillion in total invested assets.

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