Bern/London/Washington: UBS, one of the largest multinational banks in the world, has approved the acquisition of its Swiss rival Credit Suisse. With the mediation from Switzerland’s government and the Swiss Central Bank, it was announced that the two parties had concurred on the proposal on Sunday. However, even after this takeover, the international stock market has remained volatile, and investors’ fears have not been quelled. Major stock markets in the US, Europe and Asia fell sharply on Monday. At the same time, crude oil prices have also dropped by 3 per cent. Gold prices, known as safe investments in times of financial uncertainty, soared to $2,000 an ounce.  

Credit Suisse, one of the oldest banks in Europe, lost nearly $8 billion in 2022. After this information was revealed last month, the bank’s shares began to fall. In a report published in March, the bank revealed some material weaknesses in its financial reporting. After disclosing this information, the bank’s top investors refused to provide financial aid. In the wake of these events, the bank’s shares fell by 25 per cent in the last week.  

With more than a trillion in profits, over $550 billion in assets, and employees exceeding 50,000, Credit Suisse was among the top 10 biggest banks in the world. The Financial Stability Board (FSB) set up by the G20 group has referred to the Swiss bank as the Global Systemically Important Bank (G-SIB). The list includes 30 major banks from the US, Europe and Asia. These banks are also recognised as ‘Too Big to Fail’. The Swiss bank with such a background falling into trouble has caused a stir globally.  

It is being repeatedly warned that the global economy will be hit by a recession caused by the rise in inflation due to the corona pandemic and the subsequent Russia-Ukraine conflict. In the wake of the possibility of a recession, a big bank such as ‘Credit Suisse’ facing trouble will put the global economy into a crisis. Therefore, the Swiss government and the Swiss National Bank immediately intervened and decided to save Credit Suisse with the help of another big bank ‘UBS’.  

According to the announcement made on Sunday, UBS has taken over Credit Suisse for $3.24 billion. The Swiss National Bank will provide additional financial assistance per the preliminary agreement. Around 9,000 employees of Credit Suisse will be laid off at the same time, sources claimed. The UBS takeover of Credit Suisse has dashed expectations of global investors finding relief.  

The Swiss banking sector is known for its strict rules and secrecy. However, this reputation has been hit due to the failure of Credit Suisse, indicating a loss of confidence in European banking, along with Swiss banking. As a result, the stock markets worldwide were hit on Monday. In the US, Europe and Asia, the stock indices fell by 0.5 per cent up to 2.5 per cent. The Bank’s shares were hit the most, with Credit Suisse shares falling by more than 60 per cent. Crude oil prices fell by more than 3 per cent. Gold prices continued to rise and jumped to $2,000 per ounce in Monday’s trade.  

Meanwhile, in the wake of the banking crisis, six leading global banks announced a ‘swap line’ to keep the supply of US dollars to the economy smooth. Earlier, these were used during the recession of 2008-09 and the Corona Pandemic. The swap lines include the US Federal Reserve, the European Cell Bank, the Bank of England, the Bank of Canada, the Bank of Japan and the Swiss National Bank. 

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