(Washington Examiner) UBS has agreed to buy out Credit Suisse in the aftermath of record-low shares and spiraling fear over the strength of financial institutions from the collapse of Silicon Valley Bank.
Swiss President Alain Berset announced the deal on Sunday night. He said the purchase was “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,” per the Associated Press.
Credit Suisse’s shares soared up to 33% before settling at 25% on March 16, following a two-day, record-low decline in shares.
Under the terms of the proposed purchase, UBS is buying Credit Suisse for $3.2 billion, a fraction of the $9.5 billion value that Credit Suisse was estimated at on Friday, per the Financial Times.
This is an increase from the initially-reported deal of $1 billion that three people close to the bargain toldthe New York Times on Sunday. A nearly $54 billion bailout from the Swiss National Bank proved to be futile in keeping Credit Suisse afloat, as the Swiss bank was suffering from years of scandal and instability.
The Swiss Federal Council passed an emergency ordinance that allowed the deal to go through without the approval of shareholders. The country’s laws originally included a six-week consultation period with shareholders before approving a transaction, per the New York Times.
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 bank’s focus is now on the future and in particular on the 50,000 Credit Suisse employees, 17,000 of whom are in Switzerland.