Credit Suisse has struck a deal with UBS for $3.2 billion in a rescue deal aimed at calming financial market panic triggered by the current American banking crisis.
UBS is purchasing Credit Suisse for 3 billion Swiss francs ($3.25 billion), which is around 60% less than the value of the bank when the markets closed on Friday.
It is highly possible that the merger of Credit Suisse and UBS will result in the loss of thousands of jobs in the United Kingdom. Together, the two banks are responsible for the employment of around 11,000 people at this time.
Both UBS and CS are regarded as being among the top 30 most important banks in the international monetary system, with the two lenders’ combined assets totaling close to $1.7 trillion.
Credit Suisse Reports A Whopping $1 Billion Q4 Loss
The deficit that CS reported for the fourth quarter was over $1 billion, which marks the bank’s biggest loss by far.
According to the terms of the all-share transaction, shareholders of Credit Suisse will be entitled to receive one share of UBS for every 22.48 shares of CS. It is anticipated that the transaction will be finalized by the end of the year.
After several days of frenetic talks, the emergency takeover was finally approved with the participation of financial authorities from Switzerland, the U.S., and the UK.
Banking Crisis Contagion
The announcement made by CS, in which it stated that it discovered “material weakness” in its 2021 and 2022 financial reporting procedures, was the spark that set off the mayhem.
Despite this, Credit Suisse had already begun to lose the confidence of investors well before this week.
Following the disclosure by the lender of the flaws uncovered in the reporting process it would use for 2021 and 2022, Credit Suisse’s most important shareholder, the Saudi National Bank, stated that it would not purchase any additional shares of the Swiss bank.
The subsequent failure of Silvergate Bank, Silicon Valley Bank and Signature Bank caused widespread fear among investors and raised concerns about Credit Suisse.
This was due to the fact that the failure of Signature and SVB was a signal that difficulties may spread to the banks of a very big size. Credit Suisse was one of the world’s largest financial institutions.
Crypto total market cap rising a bit at $1.14 trillion on the daily chart at TradingView.com
The failure of SVB and Signature put the attention on Credit Suisse, yet the three financial institutions’ issues are not connected in any way.
Will The Buyout Benefit Crypto?
As the banking sector experiences yet another tumultuous event, supporters and enthusiasts of cryptocurrencies have taken to social media to express their jubilation and triumph.
The macro backdrop for $BTC has never been more perfect
– Fed must reduce aggressiveness in rate hikes with economy slowing & global financial system turmoil
– Equities not attractive given slowing sales & high PE
– Bonds offer mediocre yield & R/R profile
– Fiat increasingly… https://t.co/8MHPLrAJEw pic.twitter.com/g0sd52UzDD— Andrew Kang (@Rewkang) March 15, 2023
With the ongoing rolling bank failures in the U.S., caused by a combination of irresponsible fractional reserve banking, the Fed’s unpredictable rate fluctuations and poor risk management, the general public’s erosion of trust in our banking system is reaching new levels.
— Misha Lederman (@mishalederman) March 15, 2023
At the time of writing, Bitcoin was trading at $27,979.23, up 26.7% in the last seven days.
-Featured image from Business Today