UBS Agrees to Buy Rival Credit Suisse

Switzerland’s largest bank, UBS, agreed on Sunday to buy its beleaguered and longtime rival Credit Suisse for about $3.2 billion, the most drastic bid yet to arrest the financial panic that has swept the globe over the past week.

The deal

The deal, hastily brokered over the course of a few days by the Swiss government, signifies the stunning fall of a 166-year-old institution that was once an emblem of Swiss pride. It is perhaps the most sweeping shake-up of the global banking sector since the 2008 financial crisis, when onetime financial giants were acquired by rivals to avoid catastrophic meltdowns.

Created in 1856 to finance Switzerland’s rail network, Credit Suisse ascended to the top echelons of finance, at times standing toe to toe with American titans like JPMorgan Chase.

Scandals

But the bank, which is based in Zurich, was also tarred by decades of scandals, management upheavals and failed attempts at reform that damaged its reputation, attracted lawsuits and left it reeling from losses. The recent rout in banking stocks, spurred by the collapse of Silicon Valley Bank this month, brought its longstanding vulnerabilities into sharp relief and hastened its demise — highlighting just how panicked investors are.

A historic day

“This is a historic day in Switzerland, but frankly, a day we hoped would not come,” Colm Kelleher, UBS’s chairman, told analysts on Sunday.

Swiss government leaders and regulators said on Sunday that the deal was the most effective way of reassuring investors about the health of the country’s financial sector and the possibility of its troubles spilling across its borders.

About E. J. McKay

E.J.McKay is a Shanghai-headquartered investment bank with a special focus on mergers & acquisitions. We are one of the most long standing independent investment banks in China, with core business of mergers & acquisitions and financing advisory.