Credit Suisse Crisis: Credit Suisse said that the deal is expected to be completed by the end of the year.
New Delhi:
Credit Suisse crisis: The banking sector crisis that started from America has now reached Europe. Credit Suisse, one of the oldest banks in Europe, is facing a banking crisis these days. Meanwhile, Switzerland’s largest bank UBS has taken a historic step to save the country’s second largest bank Credit Suisse. UBS has announced to buy Credit Suisse Bank for 3 billion Swiss francs i.e. about $ 3.2 billion. In this deal (UBS-Credit Suisse deal), the Swiss regulator Swiss National Bank (SNB) has played an important role so that other banks are not affected by the collapse of 167-year-old Credit Suisse.
What is the UBS-Credit Suisse deal
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The deal is backed by a liquidity backstop from the Swiss government, which has provided UBS with a guarantee cover of 9 billion francs, or $9.7 billion, for losses. Along with this, the need for shareholder approval for the deal has also been done away with. The Swiss National Bank has also promised a loan of 100 billion Swiss francs i.e. $108 billion to support the Credit Suisse Takeover.
Under this ‘all share transaction’ deal, shareholders of Credit Suisse will get one share of UBS for every 22.48 shares held. This deal has been done for 3 billion Swiss francs, so on this basis this deal has been done at the rate of 0.76 Swiss francs per share, while Credit Suisse’s share closed at 1.86 Swiss francs on Friday.
10 big things about the UBS-Credit Suisse deal
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UBS to buy Credit Suisse for 3 billion Swiss francs
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The Swiss government is providing a guarantee cover of 9 billion francs
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SNB will give 100 billion Swiss francs to support the takeover
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This deal is completely ‘All Share Transaction’ deal
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Credit Suisse shareholders will get 1 UBS share for every 22.48 shares held
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This deal has been done at a price of 0.76 Swiss Franc per share.
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Credit Suisse shares closed at 1.86 Swiss francs on Friday.
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It is valued at 7.4 billion francs at Friday’s closing.
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Tier-1 bonds in excess of 16 billion francs Credit Suisse will be devalued to zero
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The asset value of the merged bank will be $ 5 trillion.
Zero value of AT-1 bonds
After this deal, the value of Tier-1 bonds in addition to Credit Suisse’s 16 billion francs will be zero. This means that whoever will have these bonds will not get anything. UBS Chairman Colm Kehler said that this deal was very important to save the financial structure of Switzerland, equally important to save the global financial structure.
The deal will be completed by the end of this year
In a statement issued by Credit Suisse, it has been said that this deal is expected to be completed by the end of the year. UBS Chairman Colm Kelleher said that there was no option for UBS to back out. The Swiss government used an emergency ordinance to avoid shareholder approval.
‘Deal attractive to UBS shareholders’
UBS Chairman Colm Kelleher said in a statement, ‘This acquisition is attractive to UBS shareholders, but we must be clear that, as far as Credit Suisse is concerned, this is an emergency rescue. We have structured a transaction that will preserve the remaining value in the business while limiting our downside exposure. According to UBS, the asset value of the combined bank that will be formed after the merger of these two banks will be $ 5 trillion.
(This news has not been edited by NewsBust India team. This BQ PRIME Published from.)