UBS buys sinking Credit Suisse bank for $3.2 billion, Swiss government gives guarantee
Winning Bizness Desk
Mumbai. Switzerland's largest bank UBS Group AG has bought troubled Credit Suisse bank. According to reports, the country's second largest private lender UBS has bought Credit Suisse for $3.2 billion amid the banking crisis. Swiss regulator Swiss National Bank (SNB) played a key role in the deal between UBS and Credit Suisse Bank. The government of Switzerland is also supporting UBS in this deal. The Swiss government has given a guarantee cover of 9 billion francs i.e. $9.7 billion (Rs 80 thousand crore) to UBS for the risks involved in the acquisition of Credit Suisse. Credit Suisse has said in a statement that the deal is expected to be completed by the end of this year. According to UBS, the combined bank that will be formed after the merger of the two banks will have an asset value of $5 trillion.
Given a loan of 100 billion Swiss francs
To support UBS in buying Credit Suisse Bank, the Swiss National Bank also gave a loan of 100 billion Swiss francs i.e. $ 108 billion (Rs 8.91 lakh crore). Under this 'all share transaction' deal, Credit Suisse's stakeholders will be given 1 share of UBS for every 22.48 shares held. The deal is done for around 3 billion Swiss francs. It has been told in the report that this deal will be at the closing price of Credit Suisse shares in the market closed on March 17. Shares of Credit Suisse had closed at 1.86 Swiss franc on the last trading session i.e. Friday.
It is not a deal but a rescue plan
If seen, this deal has been done at a very low price, but technically it is not a deal but a rescue plan. In a press conference, Swiss Finance Minister Karin Keller-Sutter said the deal was a commercial solution, not a bailout. UBS Chairman Colm Kehler said the deal was essential to save Switzerland's financial framework. It is equally important to save the global financial structure. UBS had no option but to back out. To avoid the permissions of the stakeholders, the Swiss government has used the Emergency Ordinance.
