A Rescue in Emergency Talks
In a move that has captured the attention of the global financial market, Credit Suisse, one of the banks deemed too big to fail, has been rescued by Swiss rival UBS in a government-backed deal. The two banks engaged in a weekend of emergency talks in Switzerland, with the country’s financial regulators involved to secure a solution that could restore market confidence and manage risks to the economy.
The Best Way to Restore Confidence and Manage Risks
To achieve this, the Swiss National Bank has granted both banks a liquidity assistance loan of up to $110bn. To further reduce any risks to UBS, the federal government has granted a guarantee against potential losses worth $9.6bn (£7.9bn). The regulators worked tirelessly to facilitate the deal before markets reopened on Monday.
Protecting the Swiss Economy in an Exceptional Situation
The central bank of Switzerland has hailed this deal as a solution that secures financial stability and protects the Swiss economy in this exceptional situation.
The Reason for Credit Suisse’s Troubles
Credit Suisse has faced a string of problems in recent years, including money laundering charges. The bank, which has been in existence for 167 years, has been struggling with losses. The recent failure of two smaller US institutions over the past fortnight has only added to its troubles.
Monitoring the Situation
While the Swiss regulators worked tirelessly to ensure that this deal went through, there has been no word yet from the Bank of England or the UK Treasury, which have been monitoring the situation. It remains to be seen how this development will affect the global financial market.
