bank shares Credit Suisse and those of the UBS collapse in the Swiss stock market and in the pre-opening of Wall Street this Monday, March 20, after the purchase announcement to avoid the total bankruptcy of the bank.
On the Swiss stock market and in the Wall Street premarket, Credit Suisse plummets 60%. While the UBS loses 8% in the Swiss stock market and in the pre-opening of the New York stock market.
Under the terms of the transaction, which have been explained by UBS in a separate statement, Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares they own, which is equivalent to CHF 0.76 per share. , in an operation valued at 3,000 million Swiss francs.
The price is a significant discount to Credit Suisse’s closing price last Friday (1.81 Swiss francs per share). In addition, UBS expects the transaction to generate earnings per share by 2027 and for the bank to remain capitalized well above its 13% target.
According to the details offered in a statement issued by the Swiss National Bank (SNB), “this acquisition has been made possible thanks to the support of the Swiss federal government, the Swiss Financial Market Supervisory Authority (Finma) and the SNB“. “With the acquisition of Credit Suisse by UBS, a solution has been found to ensure financial stability and protect the Swiss economy in this exceptional situation,” he adds.
In fact, the operation has had the support of the European Central Bank (ECB), the US Federal Reserve (Fed) and the Financial Conduct Authority (FCA) of the United Kingdom.
“I welcome the quick action and decisions taken by the Swiss authorities,” ECB President Christine Lagarde explained. For their part, the US Treasury Secretary, Janet Yellen, and the Fed Chairman, Jerome Powell, welcomed “the announcements by the Swiss authorities to support financial stability.”
An announcement that can bring a headache
Lately, the United States Federal Reserve (Fed), the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank announced coordinated action to improve the provision of liquidity to through permanent exchange line agreements (liquidity swaps), in US dollars.
In an official statement, issued in Washington, the Fed and its peers said the move was taken “to improve the effectiveness of swap lines in providing US dollar financing.”
“Central banks that currently offer US dollar trading have agreed to increase the frequency of 7-day trading from weekly to daily,” the joint document states.
The market will react to this news and the fate of Credit Suisse is still far from known.
Source: Ambito
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