Switzerland’s Biggest Bank Buys 2nd Biggest Bank
Banking Crisis News
Swiss banks have always had the best reputation for being strong and safe.
The recent international banking crises has exposed cracks in that façade and now one of the biggest Swiss banks (called Credit Suisse) is in trouble. So much so that the Swiss government and regulators had to step in a broker a buy out deal by Switzerland’s biggest bank UBS.
The Union Bank of Switzerland (UBS) is a Swiss multinational investment bank and financial services company. Its HQ is in Zurich, Switzerland but it operates globally and has a strong presence in Europe, the Americas, and Asia-Pacific (not so much here in SA).
It is one of the largest and most prestigious banks in the world and has a very long history, dating back to the mid-19th century.
Ironically Credit Suisse, who saw their share prices begin to plunge in the wake of an announcement by one of their investors (about not giving them more money to use), also had a good reputation and long standing reputation.
‘even the biggest banks find themselves exposed to client and investor sentiment’
Still, given the world wide panic among those who have shares in banks (and who keep money deposited with the bank) even the biggest banks find themselves exposed to client and investor sentiment.
[read more about the banking crisis in this month’s coming issue of Debtfree Magazine]
Will The Shotgun Wedding Work?
Even though Swiss authorities and central banks have said that things are getting better, people are still worried about how the deal will affect global markets.
The buy out which some have described as a ‘shotgun wedding’, will make UBS and Credit Suisse one massive bank with over $5 trillion worth of assets and investments.
Even though the plan was put in place very quickly the markets were not exactly thrilled with the deal and the prices of UBS and Credit Suisse’s shares immediately went down a lot after the announcment.
While most experts think that the deal will probably solve the problems that Credit Suisse has been having, some other people say that they think that the fine print of the deal will be really important in determining if it works.