Swiss government announces purchase of Credit Suisse by UBS | The USA Print

Swiss government announces purchase of Credit Suisse by UBS

The bank Credit Suissethe first victim outside the United States of the banking crisis that broke out last week in this country, will be absorbed by its competitor UBSwith the endorsement of the Swiss government, the federal government announced today.

“It is a solution supported by the government, which guarantees the framework conditions for its success,” Swiss President Alain Berset told a news conference.

remembered that Credit Suisse It is part of the thirty banks considered “systemic risk” in the world banking system and stressed that its fate is “decisive” for Switzerland and its economy.

This decision “has been greeted and appreciated by different governments, including those of the United Kingdom and the United States, when they were informed by the Swiss authorities of the solution that had been found,” said Finance Minister Karin Keller- Sutter.

For the agreement to be sealed, the Swiss Confederation has offered a guarantee equivalent to more than 9,000 million euros to reduce the risks in which it incurs UBS by absorbing the Credit Suissewas explained.

This guarantee works “as if it were insurance” and will cover eventual losses “of a very specific portfolio” of the Credit Suisse that it has been seen that it could be problematic and only if the losses in question exceed a threshold that the minister did not specify.

Keller-Sutter indicated that the bankruptcy of Credit Suisse “would have had irreparable consequences” not only for Switzerland, but for banks in the rest of the world and that for this reason “we assume responsibilities that go beyond our own borders.”

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The minister assured that this arrangement “is not a rescue” because this figure only applies in the case of banks that cannot assume their insolvency obligations, which was not the case of Credit Suisse.

“Here there was not a problem of solvency, but a crisis of confidence”, it was clarified.

However, the flight of assets that the bank suffered last week and the large fall in its share price in a matter of days raised the real possibility of bankruptcy, “which would have had a huge collateral impact, which could infect UBS and to other banks” in the world, indicated the minister.

The authorities confirmed that on the 15th a possible merger between Credit Suisse and UBSbut that it was decided to keep everything in strict reserve to avoid injecting even more nervousness into the markets.

“The solution we have found is solid and is adapted to stabilize the situation and provide security to the financial markets,” Berset said.

The president of UBS, Colm Kellenher, present at the same press conference, confirmed that this operation will not be submitted to a shareholder vote and that its final conclusion could take weeks and even months, until it is fully approved by the regulatory bodies.

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