The Bank of England assured on Monday that the British banking system “is well capitalized and financed”, after UBS reached an agreement to acquire Credit Suisse, the first victim of the banking crisis outside the US.
The Bank of England welcomed the measures taken on Sunday by the Swiss authorities to support financial stability, according to a statement posted on the Twitter social network account.
Bank of England statement: Credit Suisse https://t.co/j0K8eMsWPT
— Bank of England (@bankofengland) March 19, 2023
The governor of the Bank of France guaranteed this morning that the problems at Credit Suisse and the flaws in the North American regulatory system “do not affect French and European banks.”
Problems at Credit Suisse and the US do not affect European banks, says Bank of France
“French banks are very solid” and “none of these problems affect French banks,” François Villeroy de Galhau told broadcaster France Inter.
The Saudi National Bank also assured that the acquisition of Credit Suisse will not have “no impact” in the growth plan. The transaction will be worth 3,000 million Swiss francs (3,020 million euros), paid in UBS shares.
Credit Suisse said that, taking into account the “unique circumstances affecting the Swiss economy as a whole,” the Swiss Federal Council issued an emergency ordinance for this specific transaction, according to a statement.
“More importantly, the merger will be implemented without the necessary approval from UBS and Credit Suisse shareholders to increase the certainty of the deal,” it said, adding that the parties expect the transaction to close by the end of 2023.
UBS reaches an agreement to buy Credit Suisse for 3,000 million euros
The merger between these banking giants, which are part of the club of 30 banks considered too big to fail, was closed and announced before the opening of the Asian markets, trying to avoid panic.
The banking sector has been under pressure since the big central banks started raising interest rates sharply to control inflation. Many banks have failed to catch up after years of cheap money.
The recent collapse of Silicon Valley Bank and other regional banks in the United States has increased investor anxiety and led them to sell the bonds of banks considered weaker.
Silicon Valley Bank. How the biggest banking collapse since the 2008 financial crisis unfolded
In the case of Credit Suisse, which endured two difficult years and a few scandals, leadership efforts to come up with a three-year restructuring plan were of little avail.
UBS will now benefit from a nine billion Swiss franc (9.11 million euro) guarantee from the government, which will serve as insurance if problems are discovered in very specific Credit Suisse portfolios.
The central bank also announced a liquidity facility of up to 100 billion Swiss francs (102 billion euros) for UBS and Credit Suisse.
Source: Observadora
