UBS to purchase Credit Suisse amid fallout from U.S. bank collapses

The banking giant UBS has agreed to purchase Credit Suisse, a smaller rival, Swiss authorities announced on Sunday. The historic deal comes as major financial institutions continue to grapple with the fallout from the sudden collapse of Silicon Valley Bank earlier this month, and work to stave off a broader crisis. 

“This takeover was made possible with the support of the Swiss federal government, the Swiss Financial Market Supervisory Authority FINMA and the Swiss National Bank,” the Swiss National Bank said in a statement. “With the takeover of Credit Suisse by UBS, a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation.”

UBS will buy Credit Suisse for more than $3 billion, Credit Suisse said in a news release detailing the purchase, which is expected to be completed by the end of 2023. All of the bank’s current shareholders will receive one share of UBS for around 22 1/2 shares of Credit Suisse, according to the release. 

In a statement, Axel P. Lehmann, the chairman of Credit Suisse’s board of directors, said  “the announced merger represents the best available outcome,” citing “recent extraordinary and unprecedented circumstances.”

“This has been an extremely challenging time for Credit Suisse and while the team has worked tirelessly to address many significant legacy issues and execute on its new strategy, we are forced to reach a solution today that provides a durable outcome,” Lehmann’s added.

At a news conference held Sunday afternoon to discuss the emergency purchase, Karin Keller-Sutter, president of FINMA, said “Switzerland has to take responsibilities beyond its own borders,” and added that the deal was reached in an effort to avoid “irreparable economic turmoil in Switzerland and throughout the world.” Keller-Sutter said the purchase “laid the foundations for greater stability both in Switzerland and internationally.”

Fears about the stability of the global banking system spread across the U.S. and Europe in the wake of Silicon Valley Bank and Signature Bank’s failures, which happened less than two weeks ago ago and within days of each other. Their closures prompted rare moves by the federal government as well as some of the largest U.S. banks to shore up finances at institutions that became threatened in the turmoil. 

Credit Suisse received almost $54 billion last week from the Swiss national bank as part of those negotiations,…